The National Treasury and Economic Planning has announced the successful pricing of a new Ksh233 billion ($1.5 billion) Eurobond.
In a statement on Tuesday, February 13, the Njuguna Ndungu led Ministry indicated that the debt will be repaid over three installments in 2029, 2030 and 2031.
Additionally, the statement noted that the interest rate on the funds is 9.75 percent.
“The government is pleased to announce the successful pricing of a new 9.75 per cent $1.5 billion Eurobond due in 2031.
“This will amortize in three equal instalments in 2029, 2030 and 2031, resulting in a weighted average life of 6 years. The 2031 Eurobonds have an issue price of 97.270 per cent, yielding 10.375 per cent,” the statement read in part.
CS Ndungu Explains Reason for the Eurobond
According to Ndungu, part of the proceeds from the new Eurobond will help to buy back some of Kenya’s existing Eurobonds that are due in 2024.
Additionally, the statement noted that Kenya’s bonds attracted more interest than expected and consequently helped to settle a more favorable interest rate.
“The proceeds from the 2031 Eurobonds will fund the offer to buy Kenya’s existing $2 billion Eurobonds due in 2024, pending demand in the Tender Offer. Results are expected on February 15, 2024.
Also Read: CBK Slaps Kenyans with Highest Interest Rates in 12 Years After Crucial Meeting
According to CS Ndung’u, the breakthrough in pricing the bonds will help to ease the maturity profile of the 2024 Eurobonds that have been in existence since 2015 and manage debt liabilities.
Ndungu added that “the remaining portion of the 2024 Eurobonds not purchased in the Tender Offer will be funded through a mix of the government funds and financing from multilateral and bilateral sources, including bank syndication.”
Further, the statement indicated that the move was the government’s way of diversifying its source of funding and ensuring Kenya’s debt sustainability over the medium term.
The breakthrough will help to ease the pressure piled by government’s reliance on internal borrowing coming days after the Central Bank of Kenya set a record lending rate for lenders in 12 years.
“International capital markets provide essential liquidity for the government, and the successful transaction underscores investor confidence in Kenya.
Also Read: Govt Issues Statement on Eurobond Debt Repayment
“The government appreciates the strong partnership with investors, committing to sound debt management. Proactively managing debt is a key pillar of President William Ruto’s administration, and this transaction represents a significant step toward achieving that goal,” added the statement.
IMF Loan to Kenya
Earlier on January 17, the International Monetary Fund (IMF) approved a $941 million (Ksh.150 billion) loan to Kenya with an immediate disbursement of $624.5 million (Ksh.99 billion).
Further, the loan will be disbursed under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) programs added with $60.2 million (Ksh.9.6 billion) under the Resilience and Sustainability Facility (RSF) arrangement.
The loan summed up IMF’s total funding commitment to Kenya under all three facilities to more than $4.4 billion (Ksh.704 billion).
