Treasury in the market for fourth Sh124b Eurobond

Thursday, April 22nd, 2021 00:00 | By
The National Treasury building. Photo/PD/Alice Mburu
The National Treasury building. PHOTO/Alice Mburu

Lewis Njoka @LewisNjoka

Bad publicity on the back of Covid-19 shocks will not affect uptake of the Eurobond Kenya is planning to float, experts have said.

This after National Treasury announced it is in market for a Sh124 billion Eurobond, Kenya’s fourth, before the end of this financial year on June 30.

Yesterday, the National Treasury placed a tender notice seeking for a firm to provide it with sovereign debt advisory services with the bids to be received not later than April 30.

“The main objective of this assignment is to provide liability management advisory services to the government of Kenya, through the National Treasury to restructure some external commercial debt to lower costs and risks in the public debt portfolio and improve debt sustainability,” reads the tender notice.

The move to secure a new Eurobond, however, comes at a time when the country is receiving a lot of negative publicity, especially internationally.

According to the Budget Policy Statement, the National Treasury also intends to float another Sh220 billion Eurobond before the end of the financial year to refinance a previous Eurobond which matures in 2024.

This will enable the country take advantage of the current low rates in the commercial markets which are lower than the 6.25 per cent being charged on the loan Treasury is seeking to refinance.

But recent bad press including stories on New York Times points out how enforcement of the curfew meant to curb the spread of Covid-19 has affected movement and businesses in the country.

World attention

Prior to that, Kenya had grabbed world attention after its citizens launched an online campaign calling on the International Monetary Fund (IMF) to stop giving it more loans alleging the money was misappropriated.

Early April, United Kingdom and the United States announced new restrictions for travellers from Kenya due to concerns about the spread of the South African variant of Covid-19 virus in the country, a move Kenya termed as discriminatory.

But despite all these events that paint Kenya in a negative light, experts are of the opinion that the uptake of the Eurobond by investors in the international market will not be affected.

Ken Gichinga, the chief economist at Mentoria Economy, said investors look at a country’s ability to pay and were unlikely to be influenced by the short-term challenges, especially considering that Kenya has never defaulted.

“I suspect investors will take the long-term view that Kenya still remains a very diversified economy with immense potential.

This is a temporary situation with Covid-19 and as the vaccine coverage increases, we are likely to see a full re-opening of the economy,” he said.

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