The sovereign has named Citi, JP Morgan, Standard Bank and Standard Chartered Bank to arrange a 10 and 30 year bond. The team will meet investors in Los Angeles on Tuesday, New York on Wednesday, Boston on Thursday, and London this Friday and the following Monday.
Following a volatile week in global markets, a banker on the deal said the leads intended to be particularly mindful of market conditions.
“It has been an interesting 10 days and while EM credit has held in well, we expect that the volatility in the background will mean that investors are a bit more focussed on pricing,” he said. “We won’t rush the deal into the market if conditions are volatile next week.”
Kenya's only bond issue in the international markets came in 2014. In June that year it raised a combined $2bn with a 5.875% 2019 and a 6.875% 2024. It tapped both bonds for $250m and $500m respectively in November.
Kenya’s 2024 was trading at 6.4% on Monday. Those bonds are the main reference point for pricing, and the leads intend to build out the curve from there for the 30 year bond.
The curve extension is worth around 100bp, based on the 10 to 30 curve for Nigeria, Jordan, Egypt and Argentina, a second banker on the deal said.
The proceeds of the deal will be used in part to refinance some loans. Kenya has a $540m syndicated loan maturing in March next year, and another worth $750m maturing in June. The country’s gross debt to GDP stood at 54.7%, according to analysis by JP Morgan.
Only Nigeria, rated -/B/B+, and South Africa, have issued 30 year bonds from sub-Sahara Africa. Nigeria’s 30 year bond, issued in November 2017 at 7.625%, was deemed to be a real test of EM appetite for sub-Saharan debt. A strong rally allowed the sovereign to print 30 year debt well inside what it paid for a 15 year bond earlier in the year, while drawing an impressive $11.4bn orderbook.
Nigeria locked in $1.5bn of 2047 funding at a coupon of 7.625%. In February, it paid 7.875% for a $1bn bond maturing in 2032
Kenya is being represented by Henry Rotich, cabinet secretary of the National Treasury and his team, many of whom worked on the government’s debut issue.