In­vestors’ ap­petite for Eurobond high – Rotich

The CS says the state is mon­i­tor­ing the ap­pro­pri­ate time to en­ter the in­ter­na­tional cap­i­tal mar­kets to sup­ple­ment financing

The Star (Kenya) - - News Business - RICHARD MUN­GAI @Richiy­mungai

The Na­tional Trea­sury says it will con­tinue with its plans to bor­row money from the in­ter­na­tional mar­kets to partly fund the Sh691.5 bil­lion deficit in this fi­nan­cial year’s Sh2.2 tril­lion bud­get.

The deficit is, how­ever, Sh603.2 bil­lion ex­clud­ing the Mom­basa-Nairobi Stan­dard Gauge Rail­way, which is fully funded by China.

Cab­i­net Sec­re­tary Henry Rotich yes­ter­day said in­vestors’ in­ter­est in the planned coun­try’s sec­ond Eurobond is­sue has been im­pres­sive, since the “non-deal” bond road­show in Lon­don in April.

The Trea­sury, he said, is none­the­less wait­ing for “the ap­pro­pri­ate time” and is not in a rush to test the in­vestors’ ap­petite.

“We know that in­vestors are ea­ger to con­tinue in­vest­ing in Kenya, but as you know, we have ex­panded the op­tions of financing our bud­get, rang­ing from do­mes­tic bor­row­ing through the T-bills, bonds and other in­stru­ments like syn­di­cated loans,” he told re­porters on the side­lines of the launch of the Re­gional Eco­nomic Out­look re­port by the In­ter­na­tional Mon­e­tary Fund.

The coun­try is­sued its first for­eign cur­rency bond in June 2014, and raised $2 bil­lion (about Sh196.9 bil­lion), the largest de­but for an African coun­try in the sov­er­eign bond mar­ket.

The Eurobond was over­sub­scribed more than four times at the time, sug­gest­ing strong in­vestor ap­petite.

Pro­ceeds were largely used to fi­nance in­fras­truc­tural projects, and Sh52.3 bil­lion paid a syn­di­cated loan, ac­cord­ing to Trea­sury doc­u­ments.

Rotich said the plan in the sec­ond is­sue is to raise cash to bridge the bud­get deficit in or­der to al­low a public debt man­age­ment plan to kick off.

“We are mon­i­tor­ing the ap­pro­pri­ate time to en­ter the in­ter­na­tional cap­i­tal mar­kets so that we can sup­ple­ment financing of the bud­get for this fi­nan­cial year and in the medium term,” he said.

Kenya has been re­ly­ing on debt to bridge its bud­get deficit.

This fis­cal year, the government plans to bor­row about Sh675 bil­lion, in­clud­ing Sh450 bil­lion for­eign debt, and Sh225 bil­lion from the do­mes­tic mar­ket.

By June 2015, to­tal public debt had in­creased by 20.3 per cent from Sh2.36 tril­lion in June 2014 to Sh2.84 tril­lion — 53.1 per cent of the gross do­mes­tic prod­uct.

That in­cludes a Sh140 bil­lion for­eign loan in De­cem­ber 2015 to fi­nance the sec­ond phase of SGR.

IMF says the stan­dard stress tests car­ried on Kenya’s debt do not re­veal sig­nif­i­cant vul­ner­a­bil­i­ties.

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