Kenya may issue different-tenor Eurobonds to manage upcoming maturity.

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On Friday, Haron Sirima, director of debt management office for Kenya said “The country considers issuing a Eurobond with a different term. In order to retire the $2 billion, 10-year bond that matures in 2019.”

Investors are closely monitoring how the country will handle this massive maturity. Since the country’s debt-servicing costs have skyrocketed. Also the currency has weakened over the past three years.

Sirima stated, “There is a good chance that we may issue a bond with a different term.” Adding that they may divide it into either two or three portions depending on the advice from bankers.

In doing so, they could attract a wider range of investors and space out their maturities more evenly. From its high point of 22% in July of last year, the bond’s yield has dropped to its current level of 11%. When it was first issued nine years ago, the Kenyan shilling was trading at around 7%. Since then, it has fallen by 29%, to a current value of about $124.50 per dollar.

He also noted that large maturities in the future “carry risk” and that the company would prefer to avoid them. In addition, they are nearing completion of an agreement to acquire $600 million. This sum constitutes one-third of the $900 million in commercial borrowing that was originally anticipated for this fiscal year.

Following the government’s fiscal consolidation plan, Sirima predicted that the country’s debt-to-GDP ratio would fall significantly. Public debt was at 60% of GDP at the end of last year.

“Public debt should start improving by 2026,” according to the ministry of finance’s debt sustainability analysis by the IMF and World Bank. Possibly below 55% after major maturities.

While these two organizations have labeled Kenya a high-risk debtor, the ministry says their debt is manageable.

 

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