Kenya may sell Yen-denominated debt to raise foreign bond offers

July 28, 2014
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Kenya, East Africa’s largest economy, is considering selling Samurai bonds this fiscal year as the government prepares to raise its target for borrowing on external markets, Treasury Secretary Henry Rotich said.

In addition to yen-dominated notes, the country may also offer foreign investors sukuk and diaspora bonds in the current year through June 2015, Rotich said in a phone interview on July 25 from the capital, Nairobi. A decision on the type of bond and the amount to be issued will be made in “weeks,” he said.

Kenya is grappling with a deterioration in its economic outlook as tourism wanes after foreign governments issued travel advisories highlighting growing insecurity in the nation. The warnings were prompted by a series of gun and grenade attacks across the country, including a deadly raid by Islamist militant group al-Shabaab on a Nairobi mall in September.

The World Bank has lowered its forecast for expansion this year and next to 4.7 percent from as much as 5.2 percent.

Kenya plans to reduce its 2014-15 domestic borrowing target of 191 billion shillings ($2.2 billion) and tap the difference from outside markets to fund the budget gap, said Rotich. In his June budget statement, Rotich said the nation will raise 150 billion shillings from external sources.

The revised external borrowing goal “will depend on how much we reduce domestic borrowing by,” Rotich said. “My team is working on some scenarios informed by things like available viable projects that will attract external funding, and ensuring our domestic debt market also remains vibrant.”

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