Published On: Fri, Dec 5th, 2014

Kenya’s raises $3 billion from the International Market – Bond Issue

Kenya has raised $750 million by increasing its debut $2 billion Eurobond, which closed in June, whose proceeds will finance projects in energy, agriculture and transport sectors, senior Finance Ministry officials said on Friday.

As a result, the bond attracted $3 billion against the $750 million amount targeted, which is 400 per cent over-subscription.

Giving details Friday, National Treasury Cabinet Secretary Henry Rotich said ”I wish to inform Kenyans that we have just issued a $750 million (Sh67 billion) international sovereign bond on the back of the bond we issued on June 24 through a process called a Tap, which means re-opening the bond. This transaction is therefore a follow up of the inaugural $2 billion,” Mr Rotich said

“The over-subscription is an indication that foreign investors continue to have confidence in the future prospects of our country.

During pricing, we chose an appropriate deal size of $750 million as per our original plans.

“I am pleased to report that the bond is performing well in the secondary market in the Irish Stock Exchange with good liquidity and trading at a premium.

He said the debt levels in the country were sustainable and talks with International Monetary Fund on providing a cushion against shocks was already completed and only approval by the Fund’s board was awaited early next year.

Investors in Kenya have been watching the fund-raising exercise closely, in part because the market has faced a shortage of dollars, due largely to a slide in revenues from tourism as a result of a spate of Islamist militant attacks.

Investors have snapped up African bonds in recent months, eying the continent’s strong growth rates.

“The interest rates were very favourable,” said Finance Ministry principal secretary Kamau Thuge. “They (investors) are seeing a good credit story and a good growth story.”

Finance Minister Henry Rotich said Kenya’s debt was sustainable, even by adding a total of $2.75 billion this year via the initial Eurobond offering and the tap sale.

He said infrastructure spending would help lift economic growth to about 6.5 percent in 2015, against a previous forecast of 6.4 percent, and to 7 percent in 2017. The growth forecast for 2014 is 5.3-5.5 percent.

“This year’s slight slowdown was because of the challenges we had in the tourism sector, and we see recovery in view of our investment in infrastructure, which should contribute to higher GDP growth,” Rotich told a news conference.

“The outlook looks much brighter despite the challenges we have on the impact on tourism because of the security challenges,” he said.

Source: Reuters / Additional Reporting from Agnes Gitau

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