Kenya has made a U-turn on President William Ruto’s commitment that it would pay the first $300 million instalment of the $2 billion 2014 Eurobond in December 2023.
With just three days left before the end of the year, Treasury Principal Secretary Chris Kiptoo has said that the government is awaiting advice on market conditions before making a payment on the loan.
“Indeed the government had earlier planned to undertake the buyback before the end of December 2023.
“The decision as to when to access the market shall be guided by the government-appointed joint lead managers and legal counsels based on market conditions,” Treasury PS Chris Kiptoo said.
During his State of the Nation Address in November, President Ruto said that Kenya would make the $300 million (Sh45 billion) payment earlier than the due date which is June 2024.
Bloomberg was first to report that Kenya’s early payment of the $300 million (Sh45 billion).
“Kenya made an interest payment on its eurobonds maturing in June on schedule, according to Danske Bank Asset Management, triggering a rally in the bonds,” reported Bloomberg.
“The yield on the securities dropped 65 basis points to 13.5% by 4:18 p.m. in the capital, Nairobi, according to data tracked by Bloomberg, the lowest since Nov. 23. The East African nation had until Dec. 24 to make the interest payment for the $2 billion of debt issued almost 10 years ago at 6.875%.,” said Bloomberg.
Ethiopia became Africa’s third default in as many years on Tuesday after it failed to make the payment on its $1 billion Eurobond.
While the payment was due on Dec. 11, a 14-day grace period clause meant it technically had until Tuesday to provide the money.
Ethiopia requested debt relief under the Group of 20’s Common Framework in early 2021. But the effects of the COVID-19 pandemic and a two-year civil war meant progress was initially delayed.
Ethiopian officials told bondholders in a call on Dec. 15 that the coupon was affordable, but that it was not paying in order to treat all its creditors equally.
