Kenya secures $2Bn Eurobond despite a downgrade and loss of access to an IMF standby credit facility

The issue was seven times oversubscribed making it one of the highest order book for an issue from Africa.

Kenya has announced the successful pricing of a new $2 billion (Sh203billion) Eurobond transaction despite a credit downgrade report from Moody and delayed access to standby credit facility from the International Monetary Fund (IMF).

The National Treasury on Thursday said the issue was seven times oversubscribed making it one of the highest order books for an issue from Africa.

This follows a roadshow in Europe and the US conducted with international investors resulting in a significant level of interest expressed in the issue.

“The fact that we got $14 billion  in investor appetite reflected the continued support the country receives. We now have a dollar yield curve stretching out to 30 years, making Kenya one of only a handful of governments in Africa to achieve this,” reads a statement from the National Treasury.

The Government will you use the funds for development initiatives and liability management.

Joint Mandated arranger Citi, JPMorgan, Standard Bank, Standard Chartered Bank, legal counsel, the LSE and the Irish stock exchange executed the transaction.

Last week, credit ratings agency Moody’s downgraded Kenya’s debt rating to B2 from B1 while officials were in the middle of the bond roadshow abroad, angering the government.

On the other hand, the International Monetary Fund said it had frozen Kenya’s access to a $1.5 billion standby facility last June, after failure to agree on fiscal consolidation and delay in completing a review.

Kenya’s total debt is about 50 percent of GDP, up from 42 percent in 2013. It has borrowed locally and abroad to build infrastructure like a new railway line from Nairobi to the port of Mombasa.

The finance ministry has published a plan to lower its fiscal deficit to 7 percent of GDP at the end of this fiscal year in June, from 8.9 percent in 2016/17, and to less than 5 percent in three years’ time.


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