Another Eurobond in the offing- 250bn

[SIZE=7]New Sh250bn Eurobond sparks debt fears[/SIZE]
Oct. 30, 2018, 6:00 am
By VICTOR AMADALA @itsamadala teller counts Kenya shilling notes inside the cashier’s booth at a forex exchange bureau in Kenya’s capital Nairobi, April 20, 2016. /REUTERS

The government is planning to borrow another Sh250 billion from the international market to help seal the budget deficit despite experts warning about the country’s high debt.
Treasury PS Kamau Thugge told Bloomberg news service yesterday that the country will issue $2.5 billion (Sh250 billion) Eurobond and raise another $370 million (Sh37 billion) in syndicated loans to help cover the budget shortfall of Sh622 billion.
The government expects to raise Sh46 billion from grants with the remaining balance of Sh576 billion being raised through both external and domestic borrowing — including the Eurobond and syndicated loans.
News of a third Eurobond issue comes just eight months after the government raised Sh202 billion via a sovereign bond which was largely used to retire a syndicated loan of Sh101 billion from a consortium of banks last year.
The bond was issued in February in two equal tranches of 10 and 30 years for an annual interest rate of 7.25 per cent and 8.25 per cent respectively. They are expected to mature in 2028 and 2048.
In 2014, Kenya floated the first Eurobond of Sh280 billion in two tranches of five and 10 years. It is expected to pay the first tranche of Sh97.71 billion before end of June next year.
Details of how proceeds of the first controversial Eurobond were used remain scanty. While Treasury said that amount was used to finance infrastructural projects in the country, former Prime Minister Raila Odinga insisted the money was squandered by corrupt public officers.

The government last week slashed revenue collection targets for financial years up to 2021/2022 but raised the debt portfolio for the period.
For instance, it cut this year’s revenue projection by Sh96 billion (from Sh1.949 trillion to Sh1.853 trillion) but raised public debt margin from Sh4.82 trillion to Sh5.09 trillion.
It also revised revenue targets for 2019/2020 downward by Sh42 billion to Sh2.074 trillion while that of 2020/2021 was slashed by Sh42 billion to Sh2.38 trillion. It is targeting to raise Sh2.73 trillion in revenues in 2021/222.
Public debt on the other hand is expected to grow from the projected Sh5.097 trillion this year to Sh5.977 trillion by the end of President Uhuru Kenyatta’s term.
The National Treasury attributed the downward revision in revenue targets to amendments to revenue raising measures in the recently enacted Finance Act 2018, which resulted in the reduction of projected revenues by Sh48.6 billion.
“To remedy these deviations, revenue projections for 2018/19 have been revised taking into account a revenue shortfall of Sh172.4 billion last year, lower revenue in the first two months of the current financial year, and amendments to the Finance Bill,” the Treasury said.
Kenya Revenue Authority will now have to collect Sh1.673 trillion down from a target of Sh1.768 trillion assigned during the national budget reading for 2018/19 in June.

Last week, the International Monetary Fund (IMF) joined other experts to condemn Kenya’s growing debt appetite. It downgraded its loan default status from low to moderate.

IMF also forecast Kenya’s total public debt to hit 63.2 per cent of Gross Domestic Product this year from 58 percent in 2017 and urged the state to refinance loans at longer maturities to limit refinancing risks.
“The higher level of debt, together with rising reliance on non-concessional borrowing, have raised fiscal vulnerabilities and increased interest payments on public debt to nearly one fifth of revenue, placing Kenya in the top quartile among its peers,” the IMF said in a report released a week ago.
IMF’s verdict on Kenya’s default status corroborated a recent study by the World Bank which ranked Kenya among 14 sub-Saharan countries that will struggle to pay their loans post-2021.

Last month, Standards and Poor’s rated Kenya’s fiscal and debt burden as weak, exposing the country’s poor credit profile to external lenders.
Although the global rating agency affirmed Kenya’s long and short-term currency sovereign credit ratings at B+/B, indicating a stable outlook, it gave the country’s debt burden a score of five on a scale of one (strongest) to six (weakest).

The government is expected to spend Sh870 billion to repay debts this financial year, which translates to 52 per cent of the revised revenue target for KRA.
The Eurobond’s plan could aggravate the negative sentiment on the shilling, coming on the heels of the unfavorable Article IV consultation report by the IMF, which raised concerns about Kenya’s risk of external debt distress,” Faith Atiti, an economist Commercial Bank of Africa told Bloomberg yesterday.

She added that a new Eurobond sale against a backdrop of external debt concerns and rising interest rates in the international debt markets could worsen debt sustainability concerns feeding the recent pressure on the shilling.

Last month, S&P threatened to lower Kenya’s credit ratings if the country’s external position weakens more than expected due to higher current account deficits, and consequently a faster increase in external debt.

Low credit rating by global rating agencies and international lenders like S&P, IMF and World Bank means that investors will be hesitant to purchase Kenya’s Eurobond and those who take the gamble will demand high interests.
High interests charged by investors on the expected Eurobond means that taxpayers will have to dig dipper into their pockets to repay public debt.

In September, President Uhuru Kenyatta signed into law the Finance Bill, 2018, that added the tax burden on Kenyans ostensibly to raise funds for the Big Four agenda projects, and service maturing loans.
The Act introduced eight per cent Value Added Tax on petroleum products, 1.5 per cent levy for the National Housing Development Fund and kerosene adulteration tax.
It also imposed Sh20 per kilogramme of sugar confectionery, including white chocolate, increased excise tax on cash transfer from 12 per cent to 20 per cent, and that of calls and data from 10 to 15 per cent.
The additional tax obligation saw September inflation reach an 11-month high of 5.7 per cent, indicating tougher times for mwnanchi as prices of basic products skyrocket.

Kenya is one fucked up country …the last eurobonds cannot be accounted for and here kuna nyingine… These budget deficits they are talking about are inflated artificial expenditures si kitu inafikia mwananchi…
Na bado kuna nyangau juzi alisema Uhuru is too young to retire!!

Fuck fuck fuck…Kenya ni kama ule msee anakopa Mshwari ndio alipe Tala/Branch. It will never work - poverty cycle loaded.

Saai naona uhunye mahali naskia kujinyinga .I loathe his principles .Ni kama alisomea kutoreason .Kumira kumira was a scaam!!

Watafanya nini na wakiachilia vitu zitokee in public things will collapse. shilling will lose value then goods and services will skyrocket alafu aitakuwa kumi tena?
I dont know about people posting here but if you were in jubilee last election you shouldnt complain at all because before the election it was worse na ulifanya nini saa ile ulikuwa na nafasi? and again I believe that the bigger part of jubilee renegades are just abandoning the ship because it has completed the intended voyage and it is “contaminated” by that hustler. of course jubilee is just but a name now. handshake is the in thing right now its the turn of some people kupigwa kuni round II. aha. eventually this country will be run down. we will be doing liberation number IV

If you cant pay it using 16% VAT, you pay it using another loan. Why the complains?

@spear is what I am reading here true? Tunataka eurobond ingine?

you are naive…where did the other two bonds go…cant be accounted for…how did you become elder here

Refilling the lube

“The bond was issued in February in two equal tranches of [SIZE=5]10[/SIZE] and [SIZE=5]30 years[/SIZE] for an [SIZE=7]annual interest [/SIZE][SIZE=7]rate[/SIZE] of [SIZE=7][COLOR=rgb(226, 80, 65)]7.25 [COLOR=rgb(184, 49, 47)]per cent [/SIZE]and[SIZE=7] [COLOR=rgb(184, 49, 47)]8.25 per cent[/SIZE] respectivel”

Guys it’s official your country is being auctioned. Kenyans should be angry and upset. Anyway pesa zenu mnapewa na Uliam kila Sunday lazima mulipe

After 30 yrs the do your math and see how much you will pay. This country is going to the dogs.

Bila lube my friend

its now [COLOR=rgb(184, 49, 47)][FONT=courier new][SIZE=5]Borrow for Lube[/SIZE][/FONT][FONT=courier new][SIZE=5] [/SIZE][/FONT]were done done

The govt had already said it was going to borrow 250b externally in its budget,they just didn’t specify how.
What is more concerning is the syndicated loan facility,this is like the fourth one those fools at treasury are raising.
A time for reckoning is coming, we will be driving on the edge for the next two yrs. Fingers crossed.

Waah. Tumeomba so much money mpaka nimeanza kuona the best remedy is to borrow more money so long as the country’s creditors are willing.

I remember on that Netflix documentary called Dirty Money on the Trump episode, the guy used trickery to have himself labelled a billionaire and many banks loaned him money only to realise later that there was no way he could repay even if they auctioned him. The tables had turned and he was now the one holding their balls in his (tiny) hands :D:D It was so bad that they continued giving him money so that at least he could prop up his businesses to the point where he could maybe repay them. They were that desperate.

Maybe Kenya ikiomba pesa mingi sana itafika point where we’ll have the upper hand juu all these people foolishly giving us their money watajua ata wakituuza pesa zao haziwezi rudi. Mpaka ibidi tu waendelee kutupea pesa at least economy iamke tuweze kulipa.

(I am being sarcastic of course, though Economists, what are the chances of us pulling that off?)

I sincerely feel sorry for my son and daughter who have Kenyan birth certificates


I gave up on Uhulu Kenyatta (in a chinese voice). Let him fuck the country up until it bleeds to death for all I care.

You know we gave some assets as collaterals… hope you had that in mind. Ask zambia what happened to their airport and electricity company

Can’t we halt new developments and concentrate on creation of wealth first in private sector. What is the point building roads, bridges, ports and railway you won’t own.