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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya to slow down domestic borrowing
after Eurobond issue: analysts       

NAIROBI (Xinhua) -- The Kenyan government is expected to slow down borrowing from the domestic market through long-term instruments following successful issuance of Eurobond last week, analysts said on Monday.

Kenya issued the second set of Eurobonds, a 10-year and 30-year, at coupons of 7.3 percent and 8.3 percent last week which were massively oversubscribed.

The issue that was 700 percent oversubscribed received bids worth 14 billion U.S dollars compared to the 2 billion dollars target. The money would be used for development projects and debt repayment.

“We don’t expect the government to come under pressure to borrow for the current fiscal year. This adjustment would made to accommodate the Eurobond issue,” Cytonn, a Nairobi-based investment firm, said in a debt note on Monday.

The firm added that the government is currently ahead of its domestic borrowing target, therefore, would be under no pressure to heighten borrowing from the domestic front.

Last week, the government issued two Treasury bonds with coupons rates of 10.3 percent and 12 percent in a bid to raise 388 million dollars from the local market for budgetary support.

Overall, the subscription rate for the issue came in at 60.4 percent, with the government accepting only 130 million dollars out of the 240 million dollars’ worth of bids received, an acceptance rate of 55 percent.

The low acceptance rate, according to Cytonn, was due to the Eurobond issue as the government started to adjust its borrowing activities.

           

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