News Column

Kenya's Eurobond Over Subscribed By 500 Percent,Raise Sh174 Billion-Uhuru

June 25, 2014

Eugene Okumu

President Uhuru Kenyatta has said the highly competitive Eurobond will serve to reduce domestic borrowing by the government and bring down the interest rate regime of loans.

The president made the announcement while giving a state of the economy address at State House on Wednesday afternoon.

Uhuru said that the Eurobond offer which was over-subscribed by 500 percent will be used to prudently to fund infrastructure such as energy, and transport, as well as the agricultural sector. The bond raised 2 billion dollars (about 174 billion shillings)

Uhuru said banks will now be forced to disclose all charges to their customers.

"The banks will now disclose all charges information to their customers," Uhuru said adding that this is one of the ways the government intends to streamline financial operations across commercial banks

"The Central Bank will set credit interest rates that will be used by all banks," Uhuru said.The President said this will facilitate ease of availability of funds even as the government works to facilitate lines of credit for housing projects aimed at low income earners.

Finance Cabinet Secretary Henry Rotich attributed the success of the Eurobond offer to well managed debt repayments by the country and said it was taken into account in the subscriptions.

"Investors were impressed with the management of our economy and perceived it to be very strong," Rotich said adding that the Eurobond will help diversify the government's financing for development programmes.

The Eurobond offers totalling Sh1.74 trillion has been broken down in two parts. One offer of Sh43.5 billion due for repayment in 2017 will attract an interest of 5.87 percent. The second offer of Sh1.3 trillion attracting an interest of 6.875 percent, will be repaid in 2024.

The 500 percent oversubscription was totaling Sh6.76 trillion.

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Source: AllAfrica

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