http://www.bloomberg.com/news/2014-06-04/kenya-readies-debut-eurobond-after-17-year-wait-africa-credit.html
After 17 years, the timing is finally on Kenya’s side as the government readies its first Eurobond sale, betting the nation’s growth prospects and resurgent demand for emerging-market debt will keep borrowing costs contained.
Investors may demand a yield of about 7 percent to buy the securities, less than the 7.48 percent yield on similarly rated Zambian bonds, according to Raza Agha at VTB Capital Plc in London. Aly-Khan Satchu at Rich Management Ltd. in Nairobi sees a range between 7.5 percent and 8 percent, depending on whether Kenya sells $2 billion or $1.5 billion.
“We are still living through another six to nine months of an environment which is very, very beneficial for issuers given the high demand for emerging markets,” Yerlan Syzdykov, who helps oversee the equivalent of about $5.4 billion as head of emerging markets bond and high yield at Pioneer Investments, said in an interview in London yesterday. “A lot of countries, especially in sub-Saharan Africa, will use this as an opportunity to tap the market.”
East Africa’s largest economic growth will probably accelerate to 6.3 percent this year, from 5.6 percent in 2013, driven partly by tea and cut flower exports, according to International Monetary Fund estimates. African dollar debt returned 8.3 percent this year, with the average yield dropping to a one-year low of 5.06 percent last week, JPMorgan (JPM) Chase & Co. indexes show. Gains have been fueled by speculation central banks in Europe and the U.S. will keep monetary policy accommodative.
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