KENYA – The government of Kenya is looking for lead managers for the issuance of new Eurobonds to raise US$1 billion and 1 billion euros separately, the country’s Treasury has revealed.

The East African nation said earlier this month it will not seek to overhaul its debt under a Group of 20 initiative because it fears that would curtail its ability to raise funds from global capital markets.

The first issue, whose target date is before the end of this quarter, will raise US$1 billion which could be expanded for purposes of managing liabilities, the Treasury said in the request for proposals documents sent to banks.

The second issue, which will raise 1 billion euros, is likely to be issued before the end of the quarter ending in December 2021, the ministry said in the documents, adding that could also be expanded for liability management purposes.

The new issues “are meant to finance the budget for the relevant years and restructure or smoothen Kenya’s external debt maturity profile through refinancing some of the existing commercial debts,” the ministry said.

This comes against a backdrop of weaker credit rating by global rating agencies, the latest being Standard and Poor’s (S&P), which downgraded Kenya’s credit rating to ‘B’ on declining tax revenue collections and bulging external debt obligations.

Fitch and Moody’s rating agencies have also done similar downgrades on Kenya.

But Haron Sirma, Director in charge of Debt Management at National Treasury, told The East African Newspaper that all sovereign ratings had been downgraded on account of effects of the COVID-19 pandemic.

“We can still access international financial markets and a downgrade does not mean that our access to the market has been limited,” said Sirma.

Kenya’s Treasury figures indicate that Kenya’s external debt obligations will hit US$8.48 billion)at the close of the 2020/21 fiscal year.

At the end of June 2021, the country’s public debt is forecast at US$71.55 billion and will account for approximately 69% of GDP.

Top on the list of the country’s foreign debt is a loan from China used to construct the Standard Gauge Railway (SGR).

Experts maintain that the country’s debt repayment delays will not be enough to put public finances on a sustainable footing without a policy rethink.

In January this 2021, the country secured a six-month moratorium on US$245 million out of its total Chinese debt load.

The country also got a six-month suspension of debt-service from Paris Club creditors until the end of June 2021.