The government has proposed repurchasing some of its Eurobond tenders valued at USD 2 billion and issuing new securities.
The repurchase amount will be contingent upon the proceeds generated from the new securities, scheduled to be priced on February 12. The buyback offer, inclusive of accrued interest, is set at par value and will conclude on February 14.
The financial markets responded positively to this development, as evidenced by a significant drop in the yield on the 2024 Eurobond from 15.8% to 10.6% within a single day following the announcement.
This maneuver aligns with Kenya’s strategic approach to managing its impending Eurobond maturity, amid apprehensions regarding its capacity to fulfill debt repayment obligations due to elevated food and energy import expenses and constrained foreign-exchange reserves.
Kenya’s buyback initiative follows successful Eurobond issuances by Ivory Coast and Benin, which raised USD 2.6 billion and USD 750 million, respectively.
These new issuances symbolize a resurgence of the sub-Saharan African region in international capital markets after being sidelined in 2023 due to high interest rates.
The timing of the tender coincides with investors’ shift toward risky and junk-rated investments, prompted by market anticipations of a reduction in US Federal rates. Consequently, prevailing market conditions are conducive for Kenya’s tender offer, which presents favorable terms likely to incentivize participation.
Citigroup Global Markets and Standard Bank of South Africa have been appointed by Kenya’s government as joint bookrunners to facilitate investor calls, hinting at a potential Eurobond issuance.
Analysts speculate that Kenya might be leveraging the buyback to bolster investor sentiment before returning to the market with another offering.
This strategic maneuver by the Kenyan government underscores its steadfast commitment to upholding a robust and stable economy, conveying a resolute message to investors regarding its capability and willingness to fulfill financial commitments. As the maturity date of the Eurobond approaches, Kenya will be closely monitored to observe the unfolding of this situation.