Kenya Opens Offer to Buy Back $2 Billion of Bonds; Yield Plunges
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(Bloomberg) — Kenya’s government offered to buy back its $2 billion of eurobonds that mature in June and announced plans to issue new debt. The yield on the 2024 securities plummeted.
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The offer opens Wednesday and will close on Feb. 14, according to a statement issued by the government. The plan is to purchase at par value and to pay accrued interest on the debt, while the maximum amount that will be bought back will be determined by the pricing of the new notes, which is expected to occur on Feb. 12, it said.
The yield on the 2024 debt plunged to 9.96% by 2:55 p.m. in London from 15.79% on Tuesday.
Kenya’s efforts to raise funding for the looming eurobond maturity have been a focal point for investors concerned that elevated food- and energy-import bills and limited foreign-exchange reserves will restrict its ability to repay the debt. The East African nation’s buyback offer follows announcements by Ivory Coast last month and Benin this week of new eurobond offerings, after sub-Saharan African nations were largely shut out of international capital markets last year.
“Clearly US treasuries dropping from 5% to 4% is the biggest factor,” but the International Monetary Fund deserves credit too, said Charlie Robertson, head of macro strategy at FIM Partners UK Ltd. in London. “They have backstopped countries ranging from Argentina to Kenya and Pakistan and that has given the market the reassurance it needed that the problems in Ethiopia, Ghana, Sri Lanka and Zambia won’t spread.”
Robertson said Kenya is aiming to swap its 2024 bonds into 2031 debt. Kenya’s National Treasury didn’t immediately respond to an emailed request for comment.
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Other details of the offer:
Purchase price $1,000 per $1,000 in principal amount of notes
Tender offer expires at 5 p.m. in New York City on Feb. 14
The tender offer and new notes issue aimed at “proactive management of Kenya’s external indebtedness, specifically to smooth out the maturity of the notes due in June 2024”
Citigroup Global Markets and Standard Bank of South Africa to act as dealer managers on the tender offer.
–With assistance from Monique Vanek.
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