Kenya’s government is seeking proposals from banks about a possible $2 billion Eurobond offering in the first quarter of 2018, according to two people familiar with the matter.
The East African nation’s Treasury asked banks for pitches on how to structure the sale, said the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter. The deadline for proposals is Nov. 29, they said.
Kenya’s return to international capital markets would mark its first sale of foreign debt since a debut Eurobond in 2014. The Treasury is seeking to plug a budget deficit that’s forecast to narrow to 6.4 percent of gross domestic product in the fiscal year through June from 8.5 percent last year.
The government plans to re-enter the Eurobond market before the end of the current budget year, though a placement is likely from February onward as funds are required for spending purposes, the people said.
Proposals from banks must outline the costs of either a five- to 10-year issue to be repaid in bullet form, or 12- to 15-year securities amortizing in the final three years, the people said. A government roadshow is expected to start in January, said one of the people.
Treasury Principal Secretary Kamau Thugge didn’t respond to two text messages and four calls to his mobile phone seeking comment.
Treasury Secretary Henry Rotich said earlier this month Kenya will return to international debt markets once a new government is in place. President Uhuru Kenyatta is scheduled to be sworn in for a second term on Tuesday after the country held a repeat election in October following the annulment of an August vote.
Yields on Kenya’s existing $2 billion of Eurobonds due June 2024 traded three basis points lower at 5.74 percent by 3:52 p.m. in the capital, Nairobi, on Monday.
Rotich said in May the government intended to use part of the proceeds of the Eurobond sale to repay a $750 million syndicated loan owed to banks including Citigroup Inc., Standard Bank Ltd. and Standard Chartered Plc. The government earlier this month asked for an extension on the repayment of the bulk of the loan until April. In 2014, Kenya extended the maturity of another syndicated loan by three months as it awaited better conditions to issue its debut Eurobond.