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The Treasury recently opened the tender offer for bondholders wishing to participate in the buyback, which has been priced at the bond’s par or face value. The buyback would be financed by the proceeds of the new Eurobond offer whose amount was not specified
Kenya will tap the international bond market for the first time since 2021 to raise cash to finance a buyback of the 10-year USD 2 billion (Sh 321 billion) Eurobond. There is speculation whether the country would afford to repay the debt when it matures in June.
The surprise issuance marks a departure from earlier expectations that the National Treasury would finance the planned buyback using the country’s forex reserves or proceeds from loans from multilateral lenders. The Treasury recently opened the tender offer for bondholders wishing to participate in the buyback, which has been priced at the bond’s par or face value. The buyback would be financed by the proceeds of the new Eurobond offer whose amount was not specified.
Sellers will also be paid accrued interest on their bonds, whose most recent interest payment was in January. Investors had a positive reaction to the announcement of the buyback and new bond sale, with secondary market yields on the 2024 bond that trades on the Irish Stock Market falling from 13.6 percent to 8.5 percent within an hour of the buyback disclosure recently.
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The secondary market movement of yield and price is an indicator of the risk assigned to an issuer by investors—where falling yields and rising prices signal waning risk aversion, and the opposite shows rising risk concerns.
