The government has managed to secure a third round of Eurobond priced at KSh 210 billion amid rising concerns over the ballooning public debt which staggered at KSh 5.4 trillion as of May 2019.
The new debt instrument was successfully sold in London, United Kingdom (UK), on Wednesday, May 15, and will be issued in two tranches.
A statement from National Treasury Cabinet Secretary Henry Rotich revealed the two Eurobond tranches were priced at 7% interest rate for a seven-year maturity period and 8% interest for a 12-year tenure.
“The Government of Kenya, acting through the National Treasury, successfully priced a new US$2.1 billion (KSh 210 billion), dual-tranche Eurobond of seven-year and 12-year tenors on May 15, 2019, in London, United Kingdom,” the statement read.
According to the exchequer, part of the funds raised will go towards settling old debts including a 2014 Eurobond of KSh 75 billion which will be due in June 2019, among other debt obligations.
“The proceeds from this issuance will be used to finance some of the development infrastructure projects, the general budgetary expenditure.
It will also be used to refinance part or all of the obligations outstanding under the U$750 million (2014 Eurobond) due on June 24, 2019, and potentially part of the other debt obligations,” Rotich said as quoted by the Daily Nation on Thursday.
Since the Jubilee government came to power in 2013, the public debt has risen from about KSh 1.8 trillion to KSh 5.4 trillion in May 2019 according to the Central Bank of Kenya (CBK) data.
As of September 2018, the total public debt stood at KSh 5.1 trillion, an increase from KSh 4.4 trillion in June 2017.
The debt stood at KSh 3.6 trillion in 2016, KSh 2.8 trillion in 2015, and KSh 2.3 trillion in 2014 according to the Treasury.
Going by the exchequer’s projections, the national (public) debt is likely to cross the KSh 7 trillion mark by June 2022 when President Uhuru Kenyatta’s 10-year reign comes to its end.
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The soaring public debt has largely been attributed to heavy spending by the government and borrowing mostly to fund development projects.
The Jubilee government has borrowed extensively to finance the Standard Gauge Railway (SGR) and a number of other mega infrastructure projects.
However, there have been concerns that huge chunks of the billions of shillings being borrowed has been ending up in individuals’ pockets.
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