Kenya’s Eurobond Redemption Plan
Kenya has abandoned its plan to redeem part of its 2 billion eurobond by Sunday, December 28th, 2023. The decision was made after the government failed to secure the necessary funds to make the payment.
Background of the Eurobond
In 2014, Kenya issued a 2 billion eurobond to finance infrastructure projects. The bond was issued with a 7.5% coupon rate and was due to mature in 2024. The bond was issued in two tranches, with the first tranche maturing in 2019 and the second tranche maturing in 2024.
Kenya’s Redemption Plan
In December 2023, the Kenyan government announced its plan to redeem part of the eurobond by Sunday, December 28th. The government planned to redeem 1 billion euros of the bond, which would have reduced the outstanding debt to 1 billion euros.
Failure to Secure Funds
However, the government failed to secure the necessary funds to make the payment. The government had planned to use funds from the sale of government bonds to finance the redemption. However, the government bonds were not sold due to a lack of investor interest.
Impact of the Failed Redemption Plan
The failed redemption plan has had a negative impact on the Kenyan economy. The government had planned to use the funds from the redemption to finance infrastructure projects. Without the funds, the government will be unable to finance these projects.
In addition, the failed redemption plan has caused investor confidence in the Kenyan economy to decline. Investors are now wary of investing in the Kenyan economy due to the government’s inability to make the payment.
Kenya’s Response
In response to the failed redemption plan, the Kenyan government has announced that it will seek to renegotiate the terms of the eurobond. The government is seeking to extend the maturity date of the bond and reduce the coupon rate.
Outlook
The outlook for the Kenyan economy is uncertain. The government’s failure to make the payment has caused investor confidence to decline and has put the government in a difficult position. The government will need to renegotiate the terms of the eurobond in order to restore investor confidence and ensure that the economy remains stable.