The government has sealed a $2.1 billion (Ksh210 billion) Eurobond from the United States and the United Kingdom, days after Kenya was allegedly denied a loan from China.
The Eurobond will be repaid in two tranches of 7-year and 12-year tenors, according to information from the Treasury.
The government said that the bond has been priced at seven per cent for the 7-year issue and eight per cent for the 12-year plan.
“Throughout the roadshow, the investors appreciated and welcomed the strong and resilient economic growth that Kenya has welcomed and the expected growth in 2019,” noted Treasury Cabinet Secretary Henry Rotich.
According to sources, there were almost $10 billion (Ksh1 trillion) of orders, but Kenya went for Ksh2.1 billion.
Kenya is looking to service a $750 million (Ksh75 billion) Eurobond priced at 5.875 per cent that is due for payment this June.
Also, the country seeks to finance its Ksh2.7 trillion 2019/2020 budget, which is projected to have a deficit of Ksh607.8 billion.
The close of the third issue of the Eurobond represents the third entry of Kenya in the International Debt Capital Markets following the issuance of bonds worth Ksh.200 billion (USD2 billion) in June 2014 which tapped a further Ksh.75 billion (USD 750 million) and the recent dual-tranche issue of another Ksh.200 billion in February 2018.
Kenya has grown an escalated appetite for loans in the past three years, with financial experts warning that Kenya could be unable to service her loans in future.
Kenya’s public debt crossed Ksh5.27 trillion last December, the Treasury statistics show, up from Ksh4.57 trillion a year earlier and Ksh3.83 trillion in December 2016.
In her 2019/2020 budget, Kenya will use Ksh551 billion to repay debts, a Ksh61 billion more than the Ksh490 billion spent this year. This will be 30.6 percent of the total revenue collection projected in the year.
The Kenya Revenue Authority is expected to collect Ksh1.8 trillion as ordinary revenues. The total revenue collections, including Appropriation in Aid (AIA), will be Ksh2.1 trillion.