Kenya’s Eurobond issuance sparks economic optimism

Diamond Trust Bank (DTB) has projected that Kenya’s recent issuance of a $1.5 billion Eurobond will alleviate concerns about the country’s debt situation and uplift its overall economic outlook.

DTB says the bond, which garnered demand exceeding $6 billion, is expected to have a positive impact on various economic segments, including the exchange rate, inflation, interest rates, government spending on debt payments, and development initiatives.

On Tuesday, Prof. Njuguna Ndung’u, the Cabinet Secretary for National Treasury and Economic Planning, announced that the Eurobond offer had attracted strong demand, resulting in a high-quality order book exceeding $6 billion. This allowed for tighter pricing and increased issuance. The Eurobond, priced at 9.75 percent, is due in 2031.

“The proceeds from the 2031 Eurobonds will fund the offer to buy Kenya’s existing 2 billion Eurobonds due in 2024,” Ndung’u said in a statement.

During DTB’s Economic and Sustainability Forum, Group CEO and Managing Director Nasim Devji expressed confidence in Kenya’s economic recovery, foreseeing a growth rate of 5.6 percent in 2024.

Devji moted that the tangible effects of this recovery would be more pronounced in the latter half of the year.

She stated, “In 2024, we are more optimistic that the economic landscape will continue to evolve more favorably, and signs are already evident that we are turning around. Investor sentiment has reversed remarkably. I believe the glass is more than half-full.”

The anticipated economic upturn is expected to be fueled by factors such as a rebound in global supply chains, resulting in reduced supply shocks, improved food supply due to favorable weather conditions, and stability in the foreign exchange rate.

Speakers at the forum, themed “Reinvent and build business resilience in the era of economic uncertainty and climate change,” echoed this renewed optimism in Kenya’s economy.

Following Cote d’Ivoire’s successful raising of $2.6 billion in January and Benin’s $750 million in February, Kenya has now achieved a similar feat through its buyback plan.

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EDGE-Advanced certification

Abubakar Hassan, the Principal Secretary for Trade, highlighted the government’s commitment to enhancing macroeconomic and trade investment environments. He noted, “The oversubscription of the Eurobond demonstrates confidence in the economy, and we are happy that we have that done.”

Hassan outlined the ministry’s strategy, focusing on reducing the cost of doing business, improving ease of doing business, and harmonizing county licensing frameworks, with support from the World Bank.

Additionally, DTB announced that its Head Office on Mombasa Road, DTB Centre, has achieved EDGE-Advanced certification – Excellence in Design for Greater Efficiencies.

This green building certification recognizes the building’s significant energy savings of 62 percent, water savings of 30 percent, and use of 99 percent less embodied carbon materials in its construction.

DTB has invested in solar power to meet some of the building’s energy needs, utilizes energy-efficient bulbs, and implements a waste management system that ensures all paper used is recycled.

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