Kenya Plans to Sell Sovereign Bond to Fund Infrastructure PlansJohnstone Ole Turana
Kenya plans to issue a sovereign bond in the second half of the year, raising as much as $1 billion as investor interest grows after a peaceful election last week, Finance Minister Robinson Githae said.
“The funds will be used to finance infrastructure projects” and repay part of a $600 million syndicated loan signed in May with three foreign banks, he told reporters today in Nairobi, the capital. “We target to issue the bond by September and we expect 100 percent uptake.”
Kenya’s economy, the biggest in East Africa, may grow as much as 6 percent this year, outpacing the sub-Saharan African average of about 5.4 percent, according to the International Monetary Fund. President-elect Uhuru Kenyatta, who won the March 4 election, pledged during the campaign to boost growth to 7 percent to 10 percent a year by 2015 and help create a million jobs annually.
“With the elections behind us, the outlook is positive and we expect an increase in capital inflows for investment especially in the mining and oil sectors,” Githae said.
The vote was the first since a disputed poll in 2007 led to violence that left more than 1,100 people dead. Kenyatta’s victory help spur a rally in the shilling and the Nairobi Securities Exchange All Share Index, which climbed 3.2 percent today to the highest since June 23, 2009, when Bloomberg began tracking the data.
The currency gained 0.9 percent to 85.45 per dollar by 5:17 p.m. in Nairobi, the biggest gain since Nov. 16.
The government plans to ensure “stability of the shilling to remove mayhem that may be caused by up-and-down swings,” Githae said. Inflation, which accelerated the second time in 14 months in February to 4.5 percent, will be kept below a 5 percent target, he said.
Kenya is rated by both Standard & Poor’s and Fitch Ratings at B+, which is four steps below investment grade and the same as Cape Verde and Zambia.