Global Investors Turn Focus To Kenya Ahead Of $2bn Eurobond Sale

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MoneyGlobal investors are showing an increased interest in Kenya, with the expected issuing of Sh172 billion ($2 billion) Eurobond attracting interest from leading global investment firms.

Already, a minimum of 3 top executives from leading world financiers have visited Nairobi in the last 2 weeks. One of those include CEO, Europe, Middle East and Africa region of Citigroup, James Cowles, who was in Kenya on Monday to signify his company’s interest in buying out of the upcoming bonds.

“In past 12 months the developments in governance, political situation and plans for infrastructure development are a plus and a positive for (euro) bond. These are the factors Citi and its local multinational clients are considering,” Business Daily quoted Cowles as saying in an interview.

British banking giant, Standard Chartered also sent a delegation last week led by its global chairman, Sir John Peace to meet with President Uhuru Kenyatta.

The $2 billion bond is expected to be available to investors before the end of the first quarter of 2014, with proceeds expected to fund the Sh330 billion ($3.8 billion) deficit in the national budget and pay off a Sh600 million ($6.9 million) syndicated loan that dates back to 2012.

Assessing the possibility of Kenya floating the bond successfully, Standard Chartered Bank’s head of research for Africa region, Razia Khan who was in Sir Peace’s delegation said Kenya’s economic growth pattern would attract investors.

According to her, the country’s growth pattern will assure of Kenya’s credit strength, and this “will lead to demand for the Eurobond, even if it is coming at a time when the QE (quantitative easing by US Federal Reserve) is being tapered.”

On his part, PineBridge global Chief Operating Officer George Hornig, who was spoke at a press briefing in Nairobi, Monday, noted that Kenya, Nigeria and other countries in Sub-saharan Africa are benefiting from an investment shift towards frontier markets.

PineBridge, East Africa’s largest fund manager, in charge of investment worth about Sh172 billion ($2 billion), believes Kenya’s bond will do well.

There are however concerns on the high cost of borrowing through sovereign bonds, which was occasioned by the US cutback on economic stimulus program.

Global rating agency, Fitch’s Director and lead analyst for Kenya, Carmen Altnkirch dismissed the concerns at a February 4 conference, saying there was possibility of high carry cost only if the funds cannot be used immediately.

Kenya’s Treasury has appointed leading global financial services firm, JP Morgan Chase and international law firm, Arnold & Porter LLP to be in charge of the Eurobond sale.

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