Treasury opens sale of third Eurobond in five years

Kenya Wednesday opened the sale of third Eurobond in five years to pay off debts and finance the budget amid below target revenue performance.

Notice posted on both the Irish and London stock exchanges Wednesday shows that the new Eurobond is being sold in two tranches of seven and 12 years, with JP Morgan and Standard Chartered bank being the lead arrangers.

The Treasury is yet to disclose how much it plans to raise, but bankers whom Kenya had sought advice over the fundraiser talked of $2.5 billion (Sh250 billion).

Some of the funds raised from the new issue will be used to pay off maturing five-year dollar-denominated Eurobond that was issued in June 2014

The announcement shows that investors interested in the bond will be required to give a minimum of $200,000 (Sh20 million).

The Treasury has mandated JP Morgan and Standard Chartered Bank to lead the new Eurobond issue, which will be listed on the Irish and London stock exchanges.

Foreign debt repayments due in the current year ending June will increase to Sh251.4 billion, up from Sh138.4 a year earlier and Sh35.9 million in the 12 months ended June 2017.

Kenya plans to borrow a net of Sh321 billion from external lenders in the fiscal year ending June 2019, the Treasury documents show.

The government took new $1.25 billion (Sh125 billion) medium-term syndicated loans between January and March to retire maturing short-term foreign loans, officials revealed last month, to ease debt repayment pressure on the exchequer.

Cash spent on servicing Kenya’s ballooning public will for the first time cross the Sh1 trillion mark, underlining the burden debt repayments is having on taxpayers.