Kenya National Treasury has announced season 2 of the famous Euro Bond.
This announcement was made on 22 Feb 2018. Further, the the Kenya National Treasury indicated that the Euro bond is valued at USD$2 billion.
The two page statement which Kerosi Dotcom has read and analyzed indicates that National Treasury conducted a global road show with investors and according to their observation it has attracted lots of attention.
Secondly, the Kenya National Treasury revealed that the issue was over-subscribed and it is “one of the highest order book for an issue from Africa.”
The Euro Bond issue received $14 billion in offers from investors which was interpreted by national treasury as a vote of confidence on Kenyan people and their government. The loan will be re-paid over the next 30 years.
The money received from this Euro bond issue is expected to be spent on financing development projects as well as in “liability management” whatever that means.
The Euro bond issue by the Kenya National Treasury is listed on the London Stock Exchange which according to treasury officials further supports the liquidity for the bond issue. I feel that it is wrong for the treasury to refer to those who have loaned Kenya money through the euro bond as “investors” no they are our creditors. We’re going to pay them over the next 30 years since they are not equity investors. I mean if our government uses the proceeds from the money, those “investors” will of course not own any part of resulting projects.
Those of you who have invested in the Euro bond, you are our creditors and if we fail to pay you, you will obviously come for a “pound of our flesh” if I can borrow that phrase from the book “Merchant of Venice.”
The Kenya National Treasury goes on to brag that we have received a loan in the name of a euro-bond, in their statement, they state that “this is a show of vibrancy in our economy” as we do that, one of the Asian Tigers called Singapore is paying all her citizens aged over 21 years because they achieved a surplus budget as reported by the Hindustan Times of India. I’m reliably informed that we were at the same level economically when Kenya gained her independence. What’s preventing us from achieving the same fate? Instead of Kenya National Treasury officials struggling to achieve better outcomes such as job creation, achieving a double digit economy as initially promised by the ruling party, they are making sure that they leave us with as much debts as they can. We will not pay those debts alone, for example Euro bond II will be re-paid by us and later on, by our children and their children will struggle to clear those debts. The fear is that some of the loans they will be paying may not have been used for the planned activities. It may end up in the pockets of some corrupt bureaucrats and politicians.
The hands of our children will be tied since they will be trying to repay debts created by their parents, grand-parents and ancestors (us in this case). Do not get me wrong, investors are welcome in Kenya, they should not come in the name of “creditors” but let them come as equity investors. We will not mind to co-own factories and other businesses with foreigners instead of them lending money to us so that we remain their servants for ever.
Based on the above premise, I find this to be a misleading statement peddled by the Kenya National Treasury.
Specifically with 30-year yield, investors have shown their long term belief that Kenya is a stable economy in which long-term investments are safe. It also shows investor comfort with the continuity of government following elections last year. – extract from the statement issued by the Kenya National Treasury.
Other players in making sure that Kenya dives into the abyss of debt includes: JP Morgan, Citi, Standard Bank as well as Standard Chartered Bank. The Irish Stock Exchange and London Stock exchange provided a go a head in the form of legal counsel during the transaction.
Source: Statement issued by the Kenya National Treasury on 22 Feb 2018.
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