After negotiations to hire the lead manager, which will probably be completed in the next week or two, Kenya will start marketing the securities abroad over about six-weeks and then issue the dollar-denominated debt, Rotich said in a phone interview today from the capital, Nairobi. In September, Rotich said the country planned to raise $1.5 billion to $2 billion to repay a $600 million syndicated loan and finance infrastructure including rail links and power-generation projects.
“We have notified JPMorgan and invited them to discuss a letter of mandate, which is essentially a contract, to be the lead manager of the sovereign bond,” Rotich said. “The bond could be issued in November or the plan could flow over to January, since December is usually a bit quiet.”
Kenya’s move to tap foreign debt markets follows similar issuances by other African nations. Rwanda became the first East African country to sell a Eurobond, raising $400 million in April, while Nigeria and Ghana both issued their second batch of international notes in July. The country has repeatedly delayed plans for the sovereign bond since at least 2007 when the global financial crisis squeezed credit markets.
Kenya prefers to have two to three lead arrangers for its inaugural overseas bond, though JPMorgan will have the option to seek co-managers once the contract is signed, Rotich said.
Kenya has also invited Arnold & Porter LLP, based in the U.S., to be lead counsel, Rotich said. The exact timing and amount of money Kenya will seek to raise will be determined in consultation with the arrangers, he said.
Standard & Poor’s and Fitch Ratings have a B+ rating on Kenyan debt. That’s four levels below investment-grade and on par with Zambia and Cape Verde. It has the equivalent B1 rating from Moody’s Investors Service.
The attack last month by Islamist militants on the Kenyan Westgate Mall that left at least 67 civilians and security personnel dead will dent tourism and is “credit negative” for the nation, according to Moody’s Investors Service. It was the worst such attack in Kenya since 1998 when al-Qaeda bombed the U.S. Embassy in Nairobi, leaving more than 200 people dead.
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