Kenya is considering floating the 4th Eurobond on the international market as it seeks funds to help pay off part of its debt obligations, set to hit US$ 8.5 Billion by the close of the current fiscal year ending June 30th, 2021.

This comes against a backdrop of weaker credit rating by global rating agencies, the latest being Standard and Poor’s (S&P), which downgraded Kenya’s credit rating to ‘B’ on declining tax revenue collections and bulging external debt obligations.

Kenya Credit Ratings

Fitch and Moody’s rating agencies have also done similar downgrades on Kenya.

Treasury figures indicate that Kenya’s external debt obligations will hit KSh 925 Billion ($8.48 Billion) at the close of the 2020/21 fiscal year.

But Haron Sirma, Director in charge of Debt Management at National Treasury, told The East African Newspaper that all sovereign ratings had been downgraded on account of effects of the COVID-19 pandemic.

“We can still access international financial markets and a downgrade does not mean that our access to the market has been limited,” said Sirma.

It is still unclear how much Kenya will be seeking through this Eurobond issue, with Treasury saying this will only be determined after parliament approves a supplementary budget for the current fiscal year.

At the end of June 2021, the country’s public debt is forecast at KSh 7.8 trillion (US$71.55 billion) and will account for approximately 69% of GDP.

Top on the list of the country’s foreign debt is a loan from China used to construct the Standard Gauge Railway (SGR).

Experts maintain that the country’s debt repayment delays will not be enough to put public finances on a sustainable footing without a policy rethink.

In January this year, the country secured a six-month moratorium on US $245Million out of its total Chinese debt load.

The country also got a six-month suspension of debt-service from Paris Club creditors until the end of June, 2021.