Kenyan companies will pay the price for delays by the government in issuing a sovereign bond that is expected to be the new benchmark for lending rates.
The Treasury has confirmed that it would pay more for the bond targeting up to
The tapering has increased the cost of raising money on the international market with Treasury Secretary
"The recent tapering of quantitative easing in the US suggests that Kenya's sovereign bond may be priced between 7.625 per cent per annum and 8.125 per cent per annum,"
The government plans to use part of the proceeds to pay a
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The Treasury's estimates make the sovereign bond to be issued by April more expensive than similar ones done before the US stopped recalling its debt at the beginning of the year.
Metropol executive director
"If the demand is big enough then the transaction advisers can negotiate better rates,"
Rating agency Fitch said recently that the delay would make the debt more costly for taxpayers, with a domino effect on Kenyan firms seeking commercial debt at the financial capitals.
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"Typically the sovereign bond provides the benchmark and the banks tend to follow, then the other entities," said Fitch head of
KenGen plans to borrow up to Sh420 billion over the next six years and an international bond is one of the capital raising options it is considering.
The listed firms would have to rely on borrowing from the more expensive domestic market in the absence of government issuing the sovereign bond.
The sovereign bond was initially planned for 2009 but was shelved due to the global financial crisis. It was rescheduled to last year before being pushed to the end of the first quarter of this year.
The Treasury has appointed lead transaction advisers
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