Russia-Ukraine w*r to inflict pain on Kenya’s Eurobond interests

Monday, March 14th, 2022 00:00 | By

Kenya will bear a third successive surge in interest paid to Eurobond investors after the yields on Kenya’s Eurobond rose by yet another huge margin since the onset of the Russia-Ukraine conflict.

Yields on Kenya’s 10-year Eurobond rose by 63 basis points up to nearly 6 per cent in a major shift that could together with rising grain and fuel and fertiliser prices deliver a major shock on Kenya’s price stability.

“In the international market, yields on Kenya’s Eurobonds rose by an average of 63.2 basis points. The yields on the 10-year Eurobond for Ghana increased, while that for Angola declined,” the Central Bank of Kenya said in its weekly bulletin.

This means that the government will pay more in interest to investors piling pressure on the National Treasury. Kenya has an outstanding portfolio of 4 Eurobonds worth $6.1 billion (Sh694.4 billion) that trade on the Irish and London stock markets.

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“The highest rise has been on the seven-year paper maturing in 2027, from 4.58 per cent to 6.23 per cent,” said Mwango Capital.

Last week, the Central Bank said that yields on Eurobonds rose by 28 basis points after rising by 86 basis points the previous week. This means that the yields have risen by almost 200 basis points or two percentage points.

This also means that the country’s plan to issue another Eurobond this year could face challenges as investors keep off most emerging markets.

The National Treasury has been planning to go back to the international debt market to raise up to $2.19 billion before the end of the current fiscal year as part of budget deficit financing measures.

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