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Kenya Turns To US, Europe For Eurobond After ‘Rejection’ In China

[PHOTO/ COURTESY]

Kenya is now seeking a $2.5 billion (Ksh250 billion) Eurobond from Europe and the United States in a bid to finance its budget, service loans that have matured and complete stalled projects.

According to reports, treasury officials last week flew to US and Europe to seek he loan, the country’s third in half a decade.

The East African reports that the Treasury officials were due to start meeting investors on Thursday May 9 to market the bond which is being sold in two tranches of 12 and 31 years.

This comes days after Kenya’s quest for a Ksh386 billion loan from China was allegedly denied when President huru Kenyatta visited the country in the company of opposition leader Raila Odinga.

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.

However, the new Eurobond might be a tall order for Kenya, as investors might shy away due to a move by the International Monetary Fund’s to withdraw $1.5 billion (Ksh150 billion) standby facility last year.

Read: Gov’t Floats Ksh2.7 Trillion Budget, Ksh1.7 Trillion Slotted For Recurrent Expenditure

Also, IMF downgraded Kenya’s debt distress rating from low to moderate last October.

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.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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