{"id":34325,"date":"2015-12-09T12:48:56","date_gmt":"2015-12-09T09:48:56","guid":{"rendered":"https:\/\/www.capitalfm.co.ke\/business\/?p=34325"},"modified":"2015-12-09T12:55:45","modified_gmt":"2015-12-09T09:55:45","slug":"just-what-is-this-eurobond","status":"publish","type":"post","link":"https:\/\/www.capitalfm.co.ke\/business\/2015\/12\/just-what-is-this-eurobond\/","title":{"rendered":"Just what is this Eurobond?"},"content":{"rendered":"<p><div id=\"attachment_34326\" style=\"width: 640px\" class=\"wp-caption alignleft\"><a href=\"https:\/\/www.capitalfm.co.ke\/business\/files\/2015\/12\/BUDGET-KENYANS-OUTSIDE-TREA1.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-34326\" src=\"https:\/\/www.capitalfm.co.ke\/business\/files\/2015\/12\/BUDGET-KENYANS-OUTSIDE-TREA1.jpg\" alt=\"Some Nairobi residents showed little interest on what the Eurobond is, saying that whatever their favoured opinion leaders thought it was, then that is what they believed\/FILE\" width=\"630\" height=\"350\" class=\"size-full wp-image-34326\" srcset=\"https:\/\/www.capitalfm.co.ke\/business\/files\/2015\/12\/BUDGET-KENYANS-OUTSIDE-TREA1.jpg 630w, https:\/\/www.capitalfm.co.ke\/business\/files\/2015\/12\/BUDGET-KENYANS-OUTSIDE-TREA1-300x167.jpg 300w\" sizes=\"auto, (max-width: 630px) 100vw, 630px\" \/><\/a><p id=\"caption-attachment-34326\" class=\"wp-caption-text\">Some Nairobi residents showed little interest on what the Eurobond is, saying that whatever their favoured opinion leaders thought it was, then that is what they believed\/FILE<\/p><\/div>NAIROBI, Kenya, Dec 9 &#8211; The Eurobond bond saga has taken centre stage in the media for the past few weeks now. <\/p>\n<p>The big question has been; where is the Eurobond money? How was it spent?<\/p>\n<p>Amidst the banter, Capital FM hit the streets of Nairobi to find out whether people understand what the Eurobond is in the first place.<\/p>\n<p>The results were appalling.<\/p>\n<p>&#8220;Eurobond is a loan the World Bank gave to the Kenyan government so that infrastructure projects could be completed. The Kenyan government received it and it is supposed to repay it in time period of up to five years,&#8221; said Kevin Kamau, a resident of Nairobi.<\/p>\n<p>Another Nairobi resident admitted, straight up, that he had only heard it from the media- &#8220;I have heard about the Eurobond saga on television and radio. I however have no idea what it means,&#8221; said Abdullah Hassan.<\/p>\n<p>There were some who said that they knew that the Eurobond was a loan but did not know where it came from.  &#8220;I think Eurobond is a loan the government acquired to fund various projects including clearing some of its debts. I think Ireland gave the government the money as I have heard the Irish Stock Exchange mentioned.&#8221;<\/p>\n<p>Some Nairobi residents showed little interest on what the Eurobond is, saying that whatever their favoured opinion leaders thought it was, then that is what they believed.<\/p>\n<p>&#8220;To be honest, I do not know what Eurobond is and I do not care. But the fact that Raila (former Prime Minister and Opposition leader) has said that it is money that was misused by the government, then that is what I believe,&#8221; Ken Akaliche said.<\/p>\n<p>On further grilling him why he was not interested in forming his own opinion, but opted to pick up that of someone else, Akaliche said that as a supporter of ODM, whatever the party said was true regardless of any other outcome.<\/p>\n<p>There were however a couple of Nairobi residents who had a vague idea what it is, such as Jane Muthoni. According to her, it means that the bond is not issued in Kenyan shillings but a foreign currency, hence the name.<\/p>\n<p>Other respondents got closer to the answer such as Michael Ogutu who explained that through the Eurobond, the government was essentially asking investors to lend it US$2 billion on the promise that it will pay it back with interest in five to 10 years.<\/p>\n<p>So what is Eurobond?<\/p>\n<p>Before answering this question, let&#8217;s delve into what a bond is in the first place. <\/p>\n<p>According to the Commercial Bank of Africa, a bond is a debt instrument whereby an entity such as the government or a corporation uses to raise money from the public or the private sector.<\/p>\n<p><!--nextpage--><\/p>\n<p>Investopedia further explains that a bond is a debt investment in which an investor loans money to an entity which borrows the funds for a defined period of time at a variable or fixed interest rate.<\/p>\n<p>Eurobond therefore, is a type of bond, as are government bonds and corporate bonds among others.<\/p>\n<p>Broken down, Eurobond is an international bond issued in Europe or elsewhere outside the country in whose currency its value is stated usually the US dollar. In Kenya&#8217;s instance, the government&#8217;s bond was in US dollars and was outside US. Hence, the term &#8216;euro&#8217; essentially means international.<\/p>\n<p>In most instances, Eurobonds are issued in either US dollars or Japanese Yen. When issued in dollars, they are called Eurodollars. When issued in Japanese Yen, they are called Euroyen. However, because of being frequently issued in dollars, they end up being known simply as own as &#8216;Eurobond.&#8217;<\/p>\n<p>Eurobond in Kenya <\/p>\n<p>Last Year, President Uhuru Kenyatta said that Kenya&#8217;s reason for issuing the Eurobond was to stop the government from borrowing from the domestic market which would drive down interest rates and boost investment.<\/p>\n<p>The government therefore asked investors to lend it US$2 billion, which is equivalent to Sh289.8 billion, with the promise of paying it back in five to 10 years with interest.<\/p>\n<p>It was floated on the Irish Stock Exchange.<\/p>\n<p>Interested investors were given a piece of paper (bond) by the Central Bank of Kenya on behalf of the government.<\/p>\n<p>In exchange of the bond papers, the Central Bank of Kenya collected the US2 billion loan in cash on behalf of the government.<\/p>\n<p>The investors expect to be repaid their money with stipulated interest at maturity.<\/p>\n<p>Controversy however hit when the Public Accounts Committee (PAC) went seeking an explanation on how the money was spent.<\/p>\n<p>Treasury Cabinet Secretary Henry Rotich explained to the committee how the money was spent, including on projects that were not stipulated when the bond was being floated. These included using the funds to settle the government&#8217;s debts.<\/p>\n<p>More issues were raised by PAC when it found out that the money had been put in three oversees banks which were not run by Kenya. Some of the questions that PAC also demanded to get answered included, &#8220;what happened to the accrued interest from these banks?&#8221;<\/p>\n<p>This led Opposition Principal Raila Odinga to put pressure on the government to explain where the money was. <\/p>\n<p><!--nextpage--><\/p>\n<p>The former Prime Minister also asked President Kenyatta to set up a team involving international experts to trace the Sh140billion from the Eurobond which he maintains the government was unable to account for properly.<\/p>\n<p>He has additionally asked the Treasury Cabinet Secretary to resign as the \u2018lost\u2019 money went missing under his watch. <\/p>\n<p>In defence, Rotich issued a statement that included how up to Sh250 billion was spent. <\/p>\n<p>For instance, he said that the government had used Sh196.9 billion to finance infrastructural projects while Sh52.3 billion had been used to pay a syndicated loan.<\/p>\n<p>The saga has therefore caused national uproar with the government being accused of corruption especially on social media.<\/p>\n<p>It will therefore be interesting to see how this saga turns out.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>NAIROBI, Kenya, Dec 9 &#8211; The Eurobond bond saga has taken centre stage in the media for the past few weeks now. The big question has been; where is the Eurobond money? How was it spent? Amidst the banter, Capital FM hit the streets of Nairobi to find out whether people understand what the Eurobond [&hellip;]<\/p>\n","protected":false},"author":13754,"featured_media":34326,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,1,687],"tags":[],"coauthors":[811],"class_list":["post-34325","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-kenya","category-top-stories"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.7.1 (Yoast SEO v25.7) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Just what is this Eurobond? - Capital Business<\/title>\n<meta name=\"description\" content=\"NAIROBI, Kenya, Dec 9 - The Eurobond bond saga has taken centre stage in the media for the past few weeks now. 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