Kenya’s record African Eurobond debut oversubscription to benefit NSE listings

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By Zimbabwe Investor on June 18, 2014. No Comments

In the latest Eurobond issue on the continent, Kenya secured bids worth USD 8bn (KES 702.4bn) for its debut Eurobond, highlighting foreign investor confidence despite rising terror threats.

Kenya had targeted to borrow between USD 1.5bn to USD 2.0bn (KES 175.6bn) and according to officials, the Treasury would accept USD 2.0bn. “It is the largest ever debut for an African country and speaks of the country’s high standing in the international financial markets,” an official said. “Kenya’s low yield and high investors’ interest reflect prudent and shrewd timing. Kenya received orders…four times than it wanted.”

The issue came in two tenors with a five-year tranche of USD 500m (KES 43.9bn) offering investors 5.875% return and a 10-year portion of USD 1.5bn (KES 131.7bn) guaranteeing a yield of 6.875%. These were lower than earlier Treasury estimates of slightly over 8%.

The oversubscription and lower interest rates come two days after unknown gunmen attacked the coastal town of Mpeketoni on Sunday 15 June, killing at least 60 residents. They also burnt buildings and vehicles. The attacks follow a series of gun and bomb attacks in Nairobi and Mombasa that were expected to put pressure on the Eurobond issue, including demands for higher interest rates by investors.