Rédaction Africa Links 24 with Kenyans.co.ke
Published on 2024-03-29 05:13:34
The Government of Kenya has taken a strategic step in initiating the sale of a Ksh66 billion ($500 million) Chinese bond, commonly known as the Panda Bond. This move comes as President William Ruto’s administration aims to strengthen the country’s financial resources to address the budget deficit and support various governmental projects, especially in infrastructural development.
The Ministry of Treasury has kickstarted the process of procuring the Panda Bond ahead of the next financial year, set to begin on July 1, 2024. The funds secured through this bond issuance are crucial for filling the budget gap and fueling development initiatives across the country.
Negotiations between Kenya’s National Treasury and the China-based Asian Infrastructure Investment Bank (AIIB) facilitated the agreement for the Panda Bond issuance. The decision to pursue this financing option was influenced by the successful issuance of a similar bond by Egypt through the African Development Bank and AIIB in the previous year.
Egypt managed to raise $484 million from its Panda bond sale, demonstrating the potential of this avenue for fundraising. The increasing interest from Chinese investors and other new issuers, including African countries, indicates the growing popularity of Panda bonds as a viable financing mechanism.
In addition to the Panda Bond, Kenya is also planning to raise Ksh80 billion through the issuance of a Samurai bond, a Japanese bond. This diversification of funding sources aligns with the government’s strategy to secure financial resources from various markets and institutions.
The recent agreement with the Chinese bank for the Panda Bond issuance follows Kenya’s successful buyback of part of its $2 billion Eurobond, which is set to mature in June of the current year. By issuing a new Eurobond worth Ksh230 billion ($1.5 billion), the government managed to make a partial payment towards the existing Eurobond, contributing to the stability of the Kenyan currency against the dollar.
The robust response from investors, with over $6 billion in offers for the new Eurobond, underscores the confidence in Kenya’s financial stability and economic prospects. The restructuring of the Eurobond through the issuance of a new bond reflects the government’s commitment to prudent financial management and sustainable debt practices.
President William Ruto’s administration is focused on leveraging international financing options like the Panda Bond and Samurai Bond to support development projects and drive economic growth in Kenya. These strategic initiatives are aimed at ensuring the country’s financial stability and reinforcing its position as a promising investment destination in Africa.
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