Kenya’s Tap oversubscribed by 400%


The government reopened the two billion US dollar sovereign bond it issued in June through a process known as a Tap. The proceeds were received in Kenya’s account on 3 December.

“The reopening of the Eurobond allowed the Republic of Kenya to increase the size of the existing bond by 750 million US dollars to 2.75 billion US dollars, up from 2 billion. The two tranches of the re-opened bond are identical in all material features of the inaugural bond but were issued at current favourable prices,” Cabinet Secretary to the National Treasury, Henry Rotich said in a press briefing.

He added, ”We choose to tap on the back of our inaugural bond as it enabled us to issue additional debt at much lower transaction costs than a new issue… The outstanding success of this issue offering was driven by Kenya’s great credit story and macroeconomic management.”

The reopening of the bond saw East Africa’s biggest economy receive an oversubscription of about 400 per cent, as the country received bids over 3 billion US dollars from its target of 750 million Us dollars showing continued investor confidence in Kenya.

The issue comprised of 250 million US dollars with a five year maturity and another for 500 million US dollars with a 10 year maturity and both interest rates were below 6 per cent.

(READ MORE: Kenya cuts domestic borrowing by 36.8%)

The proceeds from the bond mainly received from the United Kingdom and the United States will be used to fund the country’s ongoing infrastructure projects especially in the energy, transport and agriculture sectors.

According to Rotich the bond is performing well in the Irish Stock Exchange were it was listed and trading at a premium.

The Treasury is planning to exploit the huge investor appetite with plans for sukuk and diaspora bonds set for next financial year as the country’s current account and budget deficit are practicable.

Meanwhile, the Ethiopian government announced that its debut bond was heavily oversubscribed and raised its intended 1 billion US dollars on Friday. In May, the country received its first international credit ratings and was assigned a long-term foreign and local currency Issuer Default Debt Rating (IDR) of ‘B’ with a stable outlook by the international credit rating agency, Fitch Ratings.