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Kenya opts for new Eurobond amidst growing debt burden

Published

2 years ago

April 19, 2023

As part of moves to restore its economy, Kenya is planning to issue a new Eurobond to manage 2024’s maturity of a Ksh270 billion ($2 billion) 10-year bond.

The country’s national treasury revealed that it had opted for another Eurobond in a statement on Monday as the country faces the reality of handling the large maturing loan amid highly ballooned debt-servicing costs in recent years, and highly weakened local currency against the US dollar.

“The government of the Republic of Kenya through its national treasury is considering accessing the international capital markets before the end of the fiscal year 2023/24 (July 1, 2023, to June 30, 2024) to issue a sovereign bond,” the Treasury said in a tender call for lead arrangers to express interest in the new Eurobond plans.

The Treasury will also spend Ksh1.36 trillion ($10.07 billion) to service debt in the current financial year, which is 63 percent of the tax revenue targeted for collection by the Kenya Revenue Authority (KRA) by June.

The latest Eurobond will be the first since President Ruto took office in September last year, having announced his first budget of Ksh3.663 trillion for 2023/24.

Kenya issued the bond on June 24, 2014, with a coupon rate of 6.875 percent annually. That is, however, not the only Eurobond that will fall due during Ruto’s first term.

Another Eurobond of Ksh121.5 billion ($899.7 million) will mature on May 22, 2027. The eight-year bond with a coupon rate of seven percent per annum was issued on May 22, 2019.

The other Eurobonds, totaling Ksh567 billion ($4.2 billion), will mature in February 2028, May 2032, January 2034, and February 2048.

Kenya has insisted that it would not default on its debt repayment obligations despite delayed payment of civil service salaries.

The head of the International Monetary Fund’s Africa Department, Abebe Aemro Selassie recently revealed that Kenya was not expected to seek a restructuring of its debt despite current strains and a looming bond payment.

VenturesNow

IMF mission concludes 4th loan program assessment in Egypt

Published

2 days ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.