Kenya’s debut $2bn bond breaks Africa record

Investors have offered to buy $8.8 billion against the government target of $2 billion, making it the largest ever debut Eurobond achieved by an African country.

Kenya has raised $2 billion from international investors, the largest debut for an African country in the sovereign bond market amid strong demand from pension funds, insurers and sovereign wealth funds seeking higher-yielding assets, reports Financial Times.

The much-delayed fundraising effort puts Africa on track to beat the record $11 billion it raised last year from the international capital markets, after Zambia, Morocco and South Africa also issued bonds in recent months. Investors anticipate that Ghana and Ivory Coast will tap the capital markets before the end of July.

Investors placed orders for more than four times the amount that Nairobi finally raised, suggesting strong appetite for higher risk assets. The strong demand came in spite of a terror attack that killed at least 48 people in Kenya on Sunday night.

Bankers on Monday said the capital raising yielded two notes: a $500 million, five-year bond paying an interest rate of 5.875 percent, and a $1.5 billion 10-year note with a yield of 6.875 percent. The yields were lower than initially thought.

“Kenya’s gotten really, really lucky with the yield, there’s been a humungous rally…and there’s very strong global demand for African sovereign paper,” said Aly-Khan Satchu, a Nairobi-based investment manager who bought the bond on behalf of several clients.

He said a rally in Egypt following elections that returned Abdel Fattah al-Sisi to power, combined with the intervention of the International Monetary Fund in ailing Zambia, had turned round Kenya’s prospects.