Kenya prepares to launch Eurobond

Apr 05, 2016

The country could become the first in Africa to sell bonds on global debt markets in 2016.

Kenya could become the first African country to tap global debt markets this year, according to Reuters.

Finance minister Henry Rotich has scheduled a presentation that it is likely to be a test of the waters.

"(Kenya) could probably issue. Aside from the eight per cent budget deficit, it's a pretty good story," Kevin Daly, a portfolio manager at Aberdeen Asset Management, told Reuters. "The currency is stable, domestic rates are coming down, inflation is starting to fall and growth is in the five-six per cent range."

The World Bank has recently singled out Kenya as an African bright spot, with economic growth accelerating thanks to cheaper oil, a solid agriculture sector, and infrastructure investment.

However, Eurobond financing is likely to remain out of reach for most African countries this year, with debt issuance in sub-Saharan Africa reaching its lowest level in three years at the end of 2015. Governments in the region have issued $15.5 billion (€14.25 billion) in debt on national, regional and international markets in 2015, down 22 per cent on 2014 and the lowest level since 2012.

Several factors have reduced investors' appetite, including sinking currencies, the fall in oil prices and the slowdown of the Chinese economy, which has in turn slowed the growth of African countries.

Yet in 2014, bonds had reached record levels, driven by historically low interest rates and the US Federal Reserve's very accommodative policy, designed to boost infrastructure projects.ADNFCR-2976-ID-801815929-ADNFCR