The $2 billion Eurobond issued by Kenya is scheduled to mature in June 2024, and according to David Ndii, Chair of the President’s Council of Economic Advisors, the instrument is fully funded.
He said this at the NCBA Group’s Microeconomic Outlook event on November 7 at the Serena Hotel.
Ndii said the IMF has resources and is able to supplement Kenya’s program up to $650.0 million, which the institution has approved.
The IMF was established to support nations like Kenya that are adopting the proper policies to protect the stability of the world economy.
“Without the IMF programme, we would probably default,” said Ndii.
In order to prepare for a return to the markets in the event that the tightening eases, Ndii said a buyback is possible before the end of 2023.
The biggest bond maturing in emerging economies is Kenya’s 2024 Eurobond, and questions have been raised about the country’s ability to fulfill its financial obligations.
According to Njuguna Ndungu, the National Treasury, bilateral lenders are equally as important as multilateral lenders in assisting Kenya resolve the $2 billion bond.
Standard Group, a South African-based lender and America’s Citi were picked to advise National Treasury on how to handle a $2 billion Eurobond.
Kenya needs to repay the 10-year bond at a time when the Kenya Shilling has severely shed its value against the US Dollar.
It also comes at a time when a surge in yields has effectively locked many frontier economies out of the market.
Kenya’s public debt load (currently at 67.4 percent of DGP) and weakening shilling have also fuelled concerns about the maturing bond.
Citi and Standard will help Kenya deal with the maturity, and the Central Bank of Kenya (CBK) Governor Dr. Kamau Thugge ruled out the possibility of refinancing the Eurobond over concerns the global credit market conditions are not conducive for the issuance.
“Currently, the credit market conditions are not favourable for refinancing the Eurobond,” said Dr. Thugge.
Rising borrowing costs and tougher market conditions could mean that the government will struggle to refinance upcoming maturing debt.