Kenya has cancelled the issuance of a Sh115 billion ($1 billion) Eurobond and will instead borrow from a syndicate of banks after the Treasury received bids priced at 12 percent.
Treasury Cabinet Secretary Ukur Yatani said Eurobonds had become expensive in the wake of Russia’s invasion of Ukraine forcing Kenya to reconsider issuing a bond.
Kenya had picked Citi and JP Morgan as joint book-runners for a dollar-denominated sovereign bond issue this year but stalled after the loans became too pricey.
The country will now return to syndicated loans last done in 2019 by ousted Treasury CS Henry Rotich before the government changed its borrowing policy away from commercial banks to reduce the cost of debt and lengthen maturity to ease the payment burden.
Kenya now joins Nigeria which also cancelled a planned issue of $950 million owing to unfavourable market conditions during the timeframe approved for the fundraising.
“In our funding for this financial year, we factored in borrowing from the international market, the Eurobond. But we realised as a result of challenges in Russia and Ukraine the cost of borrowing has gone really high,” Mr Yatani said.
“Last year we borrowed at six percent, right now it stands over 12 percent and this is no longer feasible. That is why we are still exploring options to look at a number of banks that can advance us the money at a cheaper rate, a figure more or less than a figure of last year, an average of six percent,” he said.