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Kenya eyes return to Eurobond to avert cash crunch

Wednesday, September 28th, 2022 01:53 | By
Eurobond. Photo/Courtesy

Kenya will be looking to return to the Eurobond markets soon to cure the cash crunch at the Treasury due to high interest rates in the domestic market that have left the country reopening several bonds.

The Central Bank Governor Patrick Njoroge said during his interview with CNN that Kenya will be returning to the external markets to raise funds as Eurobond rates continue to decline following the end of the general elections.

“We shall be going to the international markets soon, I will not say when but soon,” said the central bank of Kenya governor Patrick Njoroge.

Lack of access to the Eurobond market is one of the key reasons the Treasury had a balance of just Sh93 million by the end of August this year, sparking concerns among Kenyans over the state of finances at the coffers.

Kenya abandoned the plan to issue $1 billion Eurobond issue in June this year after rates rose above 17 per cent and later 22 percent pricing the country of the debt markets.

Sustained shortfall

“Part of the reason the Treasury had a balance of Sh93 is because it was priced out of the Eurobond market,” said Churchill Ogutu, head of research at IC Group.

The Treasury has seen a sustained shortfall in funding with last week’s auction netting just 46 per cent of the expected amount with investors preferring short term debt especially Treasury bills.

“The Treasury bill auction of September 22, received bids totalling Sh11.2 billion against an advertised amount of Sh24 billion, representing a performance of 46.6 per cent,” the CBK said.

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