Treasury PS on Kenyan Shilling Strengthening and High Eurobond Subscription

Treasury PS on Kenyan Shilling Strengthening and High Eurobond Subscription

Treasury PS Chris Kiptoo PS today asked Kenyans who are holding to their dollars to sell and also gave a short explanation as to why there was a high subscription on the Eurobond. Below is what he had to say;

Why Kenyan Shilling is Strengthening and High Eurobond Subscription

The high subscription of the Eurobond is an indication of investor confidence in Kenyan economic management and our debt management strategy. We explained to investors our economic situation, our economic plan, and provided all the necessary information. They believed in our story, and we attracted high-quality investors who are committed for the long haul, staying in the primary market.

This confidence boost is significant as it indicates that the rest of the world now believes Kenya is good for business. We were out of the market for a long time, attempting in 2021 without success. Now, with the market open, we are pleased with the results.

The increased confidence is reflected in the strengthening shilling. As of this morning, it was trading around 151, compared to 157 yesterday and 160 last week. This positive trend is encouraging, and I urge Kenyans holding dollars due to fears related to Eurobond to note that the risk of failure to settle for the Eurobond is now gone. It's time to sell your dollars and get back to business without engaging in speculation.

Analysing the financial impact, we see that the additional payment for the Eurobond is just about a billion more than what we were paying. Considering the tight liquidity situation, it is a reasonable price to pay. The interest rate for the Eurobond, around 10%, is better than the syndication loan, which was nearly 12-13%.

This refinancing has derisked the Eurobond issue, transforming a 2-billion bullet payment into manageable payments over the years. In 2029, we'll settle 500, in 2030 another 500, and in 2031, the final 500. This approach makes it easier for the government to handle future payments, compared to the previous struggle with a lump sum of 20 billion.

With the support from multilateral and bilateral sources, along with our efforts in domestic resource mobilization through tax measures and other revenue-raising initiatives, I want to assure Kenyans that we are on the right path. Mbele iko sawa.

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