Kenya's Eurobond to be oversubscribed-analysts

Railway construction: Will need cash
 KENYA WILL ISSUE A sovereign Bond worth US$2 billion before the end of next month. And analysts expect the bond to be oversubscribed by a wide margin. This is because of improved economic and Political risk which feed on growth prospects for 2014 and beyond.

And ahead of the floatation, visits by a number of high powered delegations of top guns in the financial world show a growing interest in Kenya. The delegations indicated that the bond was on their diary during the visit. Hence analysts in Nairobi are upbeat that the bond will be oversubscribed.

 They have a reason to be positive. Investor confidence in the frontier market is growing as investor move lower down the ladder to Frontier Markets. Investors are shifting funds from the emerging markets to the fast growing frontier markets.


Data available to this publication shows that all sovereign debt issued by African governments in the last two years was oversubscribed. In 2011 and 2012 a number of sub-Saharan African countries issued debt worth more US$2.2 billion-and all of it was oversubscribed.

Initially, the issuers restricted themselves to just about $500 million. Pioneers in sovereign debt issuing- Namibia, Nigeria and Senegal all tested the waters by asking for US$500million in 2011. In 2012,Zambia raised some US$750 million. The debt was subscribed at US11.9 billion forcing the country to up its uptake to $750 million from the initial $500 million.

This is why newer issuers such as Kenya are looking at larger figures. Kenya will issue $2 billion 10-year-Eurobond to finance its infrastructure expansion and pay off some nagging debt borrowed in 2012.  This is arguably the largest  single issue of a sovereign debt in the region and perhaps, the continent. Investors are impressed by Kenya’s infrastructure development programme and would like to fund a piece of the action, said some of the delegates.
Crude Oil Pipeline. Soon to be yawning for cash

 Even the visiting delegations have been upbeat about Kenya’s infrastructure development programme. Not only that, but Kenya’s economy is well-diversified which increases are credit rating say the financial Gurus in Nairobi.

  That crude oil has been discovered in commercial quantities has also been a plus for Kenya and some financiers are said to have held talks over the oil discoveries.  

 This is a sector that is looking at huge investments in the near future which are definitely not factored in the current Eurobond.

Analysts say, that the financiers could also be preparing to invest in the Pipeline construction but wanted to have a feel of the government position.

Analysts in the delegations were upbeat that despite the change of US policy on quantitative easing the bond will attract a good demand at a reasonable rate . It is being rumoured that the rate will stand at 6.5-7.5 per cent.


Comments

Post a Comment

Popular posts from this blog

President Jimmi Richard Wanjigi!

Image
 President JW  A Raila win in Kenya’s presidential elections will be a win for Jimmi Richard Wanjigi, this Publication can confidently report. Raila will only be a vassal President, with real power lying with JW as they refer to him.  They will have no power for he has bought them and supported their campaigns. Jimmi has been plotting to bring down President Uhuru Kenyatta’s government since 2013 because the government has stood on his way to fleecing Kenyans. Wanjigi brought together the then competing opposition groups URP and TNA led by William Ruto and Uhuru Kenyatta, respectively in 2012, ahead of that year’s election.  His idea was to put in power a government that will look the other way as he plunders Kenya. Among his pet project that he hoped the new government will allow him to implement, was the US$ 9 billion Standard Gauge Railway and the US$ 600 million second runway and passenger terminal at the Jomo Kenyatta International Airport in Nairobi. The two projects,
Read more

Why Tanzania should abandon Regional SGR

Image
The region marked in red is waste of Good Money Tanzania should abandon its regional SGR ambitions for now. She should instead focus on and develop a domestic SGR.  The regional SGR is spending good money chasing after bad money. This is why; Uganda has chosen to build her Standard Gauge Railway link through the Northern corridor to the Mombasa Port. Uganda’s departure puts the viability of the Central Corridor and the Dar-es-salaam Port as a regional transport hub, in doubt. The feasibility study on the Dar-Es-salaam, Isaka, Kigali, Keza- Musongati ( DIKKM) Railway Project, as the Central Corridor line is called, shows that the traffic flow on the line is low and that, to make a minimum return on investment, it must ship 8.5 million tons per year. Tanzania on her own can generate an estimated 3.1 million tons of freight per year; Rwanda, including DRC 2.3 million tons and Burundi 3.1 million tons. These numbers are estimated at what is called the conservative low g
Read more

Construction of Tanzania’s” bridge over the sea” begins

Image
A prototype of the entire project on Kigamboni side CONSTRUCTION OF THE long awaited Kigamboni Bridge in Dar-es-salaam, Tanzania, has begun. Tanzania’s President, Jakaya Kikwete, laid the foundation stone two weeks ago, signaling the beginning of construction works.  The US$138 Million toll-road will be completed in 36 months. The works include the construction of a 680M long-four lane - bridge across the Indian Ocean, 2.5 Km of six lanes highway, pedestrian paths and a toll plaza The bridge will be linked to Dar city by a 1.0 KM six lane highway while to Kigamboni; it shall be linked by a 1.5 KM six lane road. In total the works include the bridge and 2.5 KM of roads, all totaling 3.2 KM.  According to a note from Tanzania’s Ministry of Works, the bridge is a joint venture between the Government of Tanzania and NSSF.  NSSF will own 60 per cent stake while GOT owns the rest.  The same note says that on completion its management will be concessioned for 25 years.  T
Read more