Money Markets
Treasury Cabinet Secretary Henry Rotich. PHOTO | FILE
By GEOFFREY IRUNGU
In Summary
- Treasury Cabinet Secretary Henry Rotich said that subscription in the new deal reached Sh270 billion ($3 billion) even though they were seeking Sh67 billion only.
- He said the over-subscription is an indication that foreign investors continue to have confidence in the future prospects of our country
Kenya has raised an extra Sh67 billion ($750 million)
from the international bond market at an average interest rate of 5.5
per cent, a price lower than that of the initial Sh180 billion ($2
billion).
Treasury Cabinet Secretary Henry Rotich said that
subscription in the new deal reached Sh270 billion ($3 billion) even
though they were seeking Sh67 billion only.
In the debut offer, which had two portions, the
interest rate (coupon) was 5.875 per cent for the first Sh500 million
with a tenor of five years and 6.875 per cent for the second portion of
the bond with a tenor of 10 years.
In the re-opened bond, the first part amounting to
$250 million (Sh22.5 billion) had a yield of five per cent with a tenor
of five years while the other part of $500 million (Sh45 billion) had a
yield of 5.9 per cent with a 10-year maturity.
Performing well
“The over-subscription is an indication that
foreign investors continue to have confidence in the future prospects of
our country,” said Mr Rotich.
He said that the two tranches of the re-opened bond
are identical in all material features to the inaugural bond “but were
issued at current favourable prices.”
Following the successful re-opening of the bond, Mr
Rotich said the raising of more cash through the sukuk (Islamic) and
samurai (Japanese-like) bonds would only happen in the next fiscal year
starting July 2015.
The minister said the re-opening, also called a
tap, enabled the Treasury to raise the cash at lower transaction costs,
which include fees paid to the arrangers.
“We chose a tap on the back of our inaugural bond
as it enabled us to issue additional debt at much lower transaction
costs than a new issue,” said Mr Rotich.
“The earlier bond was performing well on the Irish
Stock Exchange as it was commanding a premium over the yield at which it
was originally issued, he said.
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