Eurobond Kenya. [Photo/kenyanwallstreet.com]
Financial experts are of the opinion that Kenya would most likely receive favorable yields (interest rate) in the international market in case it issues another sovereign bond in the coming weeks.
This, they say, is because of the country’s current relatively stable macroeconomic conditions.National Treasury has already announced it plans to hold an investor roadshow in the middle of this month to promote a planned Eurobond issue.
According to Reuters, which quoted Central Bank of Kenya (CBK) Governor Patrick Njoroge, the roadshow would likely be held in the United States and Britain.
Although he did not disclose the amount involved, reports quoting sources at the Treasury the government is gearing up for the issue a $1.5 billion (Sh154 billion) 10-year bond.
This is in addition to $750 million (Sh77 billion) syndicated loan for seven years from the Trade Development Bank the government has received to pay off a two-year syndicated loan that was extended last year.
However, this news has sent jitters in the local market, especially due to the country’s ballooning public debt and poor ratings by global institutions such as Moody’s and concerns raised by the International Monetary Fund (IMF).
According to the latest reviews from financial experts, Kenya currently stands to get better terms if it was to issue sovereign bonds at the international bond market.
Bloomberg analysis for the Kenyan sovereign bond carried in the latest Cytonn weekly report shows that the yield on the five-year Eurobond remained unchanged while the yield on the 10-year Eurobond rose by 20 basis points to close at 5.7 percent from 5.5 percent respectively, the previous week.
The report further says that since the mid-January 2016 peak, yields on the Eurobonds have declined by 5.3 percent points and 4.1 percent points for the five-year and 10-year Eurobonds, respectively, due to the relatively stable macroeconomic conditions in the country.
According to Dennis Kariuki, an Investment Analyst at Cytonn Investments, an increase in the yield of a bond indicates that investors are demanding a premium to invest in the bond due to the higher risk perceived.