The government has initiated the sale of a Ksh66 billion ($500 million) Chinese bond, commonly referred to as the Panda Bond, as President William Ruto’s administration endeavours to bolster its financial resources.
Recent reports indicate that the Ministry of Treasury has initiated the process of procuring them before the start of the next financial year, scheduled for July 1, 2024.
The government's move to secure this substantial loan aims to address the budget deficit, with the allocated funds earmarked for various governmental projects, particularly infrastructural development.
The agreement for the funds was reached subsequent to negotiations between Kenya's National Treasury and China.
Kenya's decision to issue the bonds was spurred by Egypt's successful issuance of the Panda bond in October last year.
The North African nation managed to raise $484 million from the sale of the three-year Panda bond, which was priced at 3.5 per cent.
Recent reports indicate that the Panda bond, dominated by Chinese investors, is gaining traction and attracting interest from new issuers, including African countries.
Similarly, Kenya is also planning to raise another Ksh80 billion through the issuance of the Samurai bond, a Japanese bond.
In February this year, Treasury Principal Secretary Chris Kiptoo stated that Kenya had reached an agreement with Nippon Export and Investment Insurance (NEXI) for the issuance of a Samurai Bond.
The agreement with China comes a month after Kenya made a buyback in part to its Ksh310 billion ($2 billion) Eurobond which matures in June this year.
The government successfully made a partial payment towards the Eurobond acquired in 2014, following the issuance of a new Eurobond amounting to Ksh230 billion ($1.5 billion).
In an announcement made by the Ministry of Treasury in February of this year, it was revealed that the new Eurobond garnered over $6 billion in offers from investors.
The restructuring of the $2 billion Eurobond through the issuance of the new $1.5 billion bond contributed to the stability of the Kenyan currency against the dollar.
