The Jubilee government is on it again, this time with disturbing news of the sale of $2bn of Eurobonds, partly to repay a $750bn due to mature in June.
This has raised questions about the govt’s ability to service its mounting debt burden. Public debt has risen to nearly 60% of national output, up from below 40% in 2013.
Kenya has borrowed heavily from China to fund a $4.8bn railway scheme, the country’s largest infrastructure project since its independence from Britain in 1963.
While kenyans were busy queing for huduma number,Uhuru kenyatta was silently signing another Eurobond without parliament approval.We are doomed
— Shemeji Samson (@shemejisam) May 16, 2019
As a result, Kenya’s debt servicing costs will consume one-third of the government’s revenues this year, according to the Nairobi-based Institute of Economic Affairs. That is one of the highest ratios in sub-Saharan Africa.
According to Financial Times, Kenya is expected to sell seven-year and 12-year bonds — its third such issuance in five years. It has dropped plans to issue a 31-year tranche it had earlier marketed.
I thought Eurobond was a scandal, when Baba told Kenyans that Jubilee had stolen this cheddar. Now, I know why handshake was between Raila and Uhuru but not DP Ruto. Continue eating baba!!! https://t.co/NOtupyASml
— Joseph Omondi (@omondii_) May 16, 2019
The Kenyan treasury, which said on Wednesday it had orders of at least $6bn, indicated that the seven-year bond was likely to be priced at about 7.25 percent and the 12-year paper at 8.25 percent.
The latter is a step up from the 7.25 percent coupon that a 10-year Kenyan bond carried when the country last came to the market in February 2018, according to Kevin Daly, emerging market bond fund manager at Aberdeen Standard Investments.
https://twitter.com/IamBravin/status/1128884801065369601
“Kenya’s debt worries have been building for some time,” said John Ashbourne, senior emerging markets economist at Capital Economics.
“Pressure on the currency will probably grow this year as a poor harvest pushes up food imports and puts pressure on the current account deficit. Were the currency to weaken against the dollar, the foreign debt burden would rise sharply,” he said.
How did we move from dealing with fake gold scammers to selling Sh210 billion Eurobond overnight, without notice or parliament approval???? @Kiss100kenya #AdelleAndShaffieOnKISS @ADELLEO @TheStarKenya pic.twitter.com/9BWMq8BBWF
— #TeamShaffie (@ShaffieWeru) May 16, 2019
After this Eurobond thingy am now convinced that very soon we shall not have control over the Mombasa port or JKIA. Watch this space
— Gifted Baby (@Denogrant_) May 16, 2019
MORE DEBT as Kenya nets Sh210 billion from a third Eurobond sale in less than 5 years. Funds meant to finance the Sh2.8 trillion FY 2019/20 budget and repay Sh75 billion bond due in June. The country's #PublicDebtKE is expected to hit Sh7 trillion by 2022 pic.twitter.com/KB4XKkEruU
— Consumers Federation of Kenya (COFEK) (@CofekRebranded) May 16, 2019