Kenya is in the market for dollar-denominated debt, with 10-year and 30-year bond issues being marketed to prospective investors, reports the Financial Times.
Citing bankers familiar with the situation, the paper reports initial pricing guidance for a yield of 7.625% for Kenya’s 10-year paper and 8.625% on the 30-year paper.
The offering comes a week after ratings agency Moody’s downgraded Kenya’s credit rating from B1 to B2 on concerns over the country’s rising debt levels. Moody’s expects government debt to further increase due to public spending plans and difficulties in raising revenues.
The offering comes a week after ratings agency Moody’s downgraded Kenya’s credit rating from B1 to B2 over concerns over the country’s rising debt levels.
Moody’s expects government debt to increase to 61% of GDP in the fiscal year to June 2019, from 56% of GDP in 2016-17 and 41% of GDP in 2011-12 due to public spending plans and difficulties in raising revenues.
Africa eyes bond markets
Kenya is one of several African countries resorting to the bond markets for their financing needs, with high volumes of debt set to mature in the coming years, which will need to be refinanced. Nigeria last week raised $2.5bn in 12-year and 20-year debt, attracting order books of over $11bn.
Meanwhile, the International Monetary Fund (IMF) has denied reports that it had ended Kenya’s access to a $1.5bn standby credit facility from last June. Earlier this week Bloomberg reported that the government had been denied access to the facility, leaving the country vulnerable in the event of any external shocks such as a sudden rise in the price of oil or strengthening of the US dollar.
Local press reports have voiced concerns that Kenya is steadily approaching a debt crisis potentially on a similar scale to that of Greece.