NAIROBI (Reuters) - Kenya is pressing on with plans for a debut Eurobond issue for $500 million in this fiscal year, its finance minister said on Tuesday, adding that the government would give an update on the issue within a fortnight.
Uhuru Kenyatta declined to confirm or deny last week's report by IFR Markets, a Thomson Reuters news and market analysis service, that the government had picked Barclays Capital and Deutsche Bank as lead managers for the issue.
"That is an issue that is in progress. Officials are still going through it. Within about a week or two we will be in a position to announce the current status. We are definitely going ahead with the Eurobond," Kenyatta told Reuters, when asked whether an inaugural Eurobond issue would come this fiscal year.
Kenyatta was speaking on the sidelines of a conference in the capital Nairobi.
Hoping to benefit from a good credit rating if next year's general election goes smoothly, officials had planned to issue a $500 million international bond in its 2012/13 (July-June) fiscal year.
But they have been forced to bring the issue forward to this fiscal year after a steep fall in its currency against the dollar and a deteriorating balance of payments position exposed the need for adequate hard currency reserves.
The current account deficit widened to $3.38 billion in the year to June 2011 from $1.92 billion in the year ago period, on the back of higher imports of merchandise goods.
Data for the third quarter of 2011 are due later this month and are expected to show a further deterioration.
Fixed-income analysts said Kenya may use the issue to shore up its funding programme for this year after investors stayed away from securities auctions in the local market.
The government missed its domestic borrowing target by a wide margin in the first quarter, collecting just 12.3 billion shillings against a target of 49.8 billion shillings.
If and when Kenya issues, it would join South Africa, Nigeria, Senegal, Namibia, Ghana and Gabon in the list of African sovereigns to borrow money in the international capital markets.
Several others, including Tanzania, Zambia and Botswana, are also thought to be considering debut deals. Kenyatta said the borrowing plan through a Eurobond was still targeting to raise $500 million.
The government is also awaiting final approval from the International Monetary Fund for the disbursement of a $250 million extended credit facility for balance of payments support, in addition to $500 million agreed earlier this year.
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