Kenya’s planned Eurobond may swell to as much as USD 2.5bn

By bne IntelliNews June 20, 2013

The size of Kenya’s planned Eurobond may rise to as high as USD 2.5bn from an initially announced target of around USD 1bn, Business Daily reported, quoting the country’s economic secretary Geoffrey Mwau. Kenya’s government has announced plans to sell sovereign bonds on the international markets by September 2013 following the largely peaceful general and presidential elections in March. The proceeds will be used to fund infrastructure projects and to partly repay a USD 600mn syndicated loan from three foreign banks signed last year.

Kenya is expected to be able to sell its Eurobond at a lower yield than that the one achieved by neighbouring Rwanda, which placed in April a USD 400mn 10-year debut Eurobond, yielding 6.875%, according to analysts. Kenya is rated at B+ by S&P and Fitch and at B1 by Moody’s, while Rwanda is rated at B by Fitch and S&P and has no rating assigned by Moody’s. Moreover, Kenya is the biggest economy in East Africa and has lower reliance on donor aid than Rwanda.

The International Monetary Fund (IMF) expects Kenya’s economic growth to accelerate from 4.7% last year to 5.8% this year and to 6.2% next year. It has predicted the current account deficit to shrink from 9.1% of GDP in 2012 to 7.4% in 2013, but to widen again to 8.1% in 2014.

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