Kenya ripe for another international bond

Kenya would get cheaper credit if it floats an international bond currently following decline of its Eurobond yields at the secondary market.

Market yields on Kenya’s Eurobond floated in 2014 have declined lower than its coupon rate, an indication that the country would get inexpensive debt should it float another bond, Cytonn, a Nairobi-based investment firm, said in its debt brief Monday.

Yields on Kenya’s 5-year and 10-year Eurobonds, with 2.1 years and 7.1 years to maturity, declined by 10 basis points both to close at 3.8 percent and 6.3 percent from 3.9 percent and 6.4 percent, the previous week, respectively.

East African nation floated the bonds in 2014 at a coupon rate of 6.8 percent for the 10-year and 5.9 percent for the five year security. Kenya raised 2.8 billion dollars from Eurobonds.

Since a mid-January 2016 peak, yields on the Eurobonds have declined by 3.3 percent and 5 percent respectively for the 5-year and 10-year Eurobonds due to stable macroeconomic conditions.

“The declining Eurobond yields and Standard & Poor’s (S&P) having maintained Kenya’s foreign and local currency sovereign credit ratings for the short and long term at “B+/B”, respectively, are indications that Kenya remains stable and hence an attractive investment destination,” noted Cytonn.

Last month, Kenya’s Treasury kicked off plans to issue the first Islamic bond by an East African country by proposing changes to several laws that will make it easier for it to access Islamic financing.

According to Treasury Cabinet Secretary Henry Rotich, the move to issue Sukuk bond is prompted by the inexpensive nature of Islamic bonds thus offering a cheaper financing option as Kenya struggles to plug holes in its budget. Enditem

Source: Xinhua/NewsGhana.com.gh

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