As Kenya faces a looming deadline to repay its maturing $2 billion Eurobond, it is considering a swap deal that would improve its financial situation and direct money to essential social programs, sources close to the discussions say.
Kenya must pay back $2 billion (Ksh.312 billion) of outstanding debt by June 24, 2024, and is in talks with banks and a few interested investors to figure out how such a deal would work.
The National Treasury has chosen Citi and Standard Group to manage its Eurobond that matures in June 2024.
The two banks, one based in South Africa and the other in the US, are giving advice to the National Treasury on how to handle the $2 billion Eurobond.
The repayment of the 10-year bond is challenging for Kenya, as its currency has shed value against the US Dollar.
The situation is worsened by the fact that many emerging economies are unable to access the international markets due to high yields.
Kenya’s high level of public debt (67.4 percent of GDP) and the weak shilling have also raised worries about the maturing bond.
In December, Kenya paid the $68.7 million (Ksh.10.8 billion) interest on the $2 billion Eurobond, one day after it scrapped the initial plan to pay $300 million (Ksh.47 billion) of the principal ahead of schedule.
Citi and Standard are assisting Kenya with the maturity, but the CBK Governor Dr. Kamau Thugge said that refinancing the Eurobond was not an option because of the poor global credit market conditions.
“Currently, the credit market conditions are not favourable for refinancing the Eurobond.”
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