The National Treasury of Kenya is seeking a lead manager to assist with its upcoming sovereign bond issuance, as the country faces limited liquidity and high yields. The cancellation of a Ksh115 billion Eurobond in 2022 has forced the Treasury to return to the international capital market to raise money to retire a USD 2 billion Eurobond that matures next year.
The Treasury has requested expressions of interest from reputable financial institutions licensed to operate in North America, Europe, and the Middle East to provide lead management services. The lead manager will advise the Treasury on the appropriate timing of the Eurobond issuance, as well as help the Treasury issue and list sovereign or government bonds of more than seven years.
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The lead manager will be responsible for advising the National Treasury on determining the appropriate timing, format, amount, tenor, coupon, all-in-cost, and other relevant terms and conditions for the issuance of the international bond. They will also advise the Treasury on the optimal liability management strategy for Kenya’s outstanding Eurobonds, including the one maturing next year. Kenya had previously tapped the services of Citi and JP Morgan as joint book-runners for its cancelled Eurobond issue.
Despite the current administration’s intention to stay away from expensive dollar-denominated loans, a shortage of dollars to repay other maturing Eurobonds has left it with no option but to return to the global financial market to roll over these loans.
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The IMF warns that in the next two years alone, a significant share of outstanding Eurobond debt will come due, about USD 6 billion in 2024 and another USD 7 billion in 2025.
Repayment pressures will mostly come from the maturity of domestic debt this year, but the repayment structure is relatively smooth except for spikes in 2023, 2024, and 2028 due to the maturities of international sovereign bonds.
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