- The new loan divided into three installments has a weight average life of six years and is expected to mature in 2031.
- Last week, Kenya opened the tender offer for bondholders wishing to participate in the buyback for its inaugural Eurobond issued in 2014.
Image: FILE
Kenya has successfully issued a new Eurobond worth $1.5 billion (Sh238 billion) to buy back the inaugural one due on June 24.
In a statement, the National Treasury says the new loan divided into three installments has a weight average life of six years and is expected to mature in 2031.
The bond is priced at 10.37 per cent, the highest rate an African state has ever offered.
Cote D’Ivoire’s January issuance and Benin’s February bonds, which raised $2.6 billion and $750 million were priced at between 8.5 and 7.5 per cent.
"The proceeds of the 2023 Eurobonds will fund the offer to buy Kenya's existing $2 billion Eurobonds due in 2024, pending demand in the tender offer whose results are expected February 15,'' the exchequer says.
It says that the combined transactions are a crucial part of the government strategy to smoothen the maturity profile of the 2024 Eurobonds and proactively manage debt liabilities.
The remaining portion of the 2024 Eurobonds not purchased in the Tender Offer will be funded through a mix of government funds and financing from multilateral and bilateral sources, including bank syndication.
"This diversified financing approach aims to maintain a relatively low weighted average interest rate in the overall public debt portfolio, ensuring Kenya's debt sustainability over the medium term.''
It adds that the international capital markets provide essential liquidity for the government, and the successful transaction underscores investor confidence in Kenya.
The new debt is coming just a week after Kenya opened the tender offer for bondholders wishing to participate in the buyback for its inaugural Eurobond issued in 2014.
Sellers will also be paid accrued interest on their bonds, whose most recent interest payment was in January.
Investors had a positive reaction to the announcement of the buyback and new bond sale, with secondary market yields on the 2024 bond that trades on the Irish Stock Market falling from 13.6 percent to 8.5 percent within an hour of the buyback disclosure on Wednesday last week.
The retirement of the 2014 Eurobond has haunted Kenya's fiscal plan, forcing the East African economic powerhouse to seek various loan facilities from both multilateral and commercial lenders.
Top of all is the $1.5 billion (Sh240.7 billion) to be disbursed by the World Bank between March and April.
The amount is part of $4.5 billion (Sh722.3 billion) commitment made by the global lender in November last year
The lender announced that, over the next three fiscal years (FY24-FY26), the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) would provide $3 billion and $1.5 billion respectively.
The International Finance Corporation (IFC) will provide roughly $1 (Sh160.5 billion) in investments and MIGA guarantees can amount to around $500 million (Sh80 billion).
Kenya has received disbursements totaling just over $1 billion Sh160 (billion) in the last two months from IMF and Trade Development Bank (TDB).
"We are very confident about handling the Eurobond debt that has posed financial risks to the country. Kenya has earned its rightful space in the international debt market,'' National Treasury PS Chris Kiptoo said.