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Kenya sells third Sh210bn Eurobond

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By HELLEN GITHAIGA
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PAUL WAFULA

By PAUL WAFULA
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Kenya has sold a Sh210 billion Eurobond, the third in five years, despite rising concern over its ability to service its debt burden.

The National Treasury Cabinet Secretary Henry Rotich says in a statement dated May 15, that the issuance “triggered an overwhelming response from investors” leading to an oversubscription of 4.5 times.

“The Government of Kenya, acting through the National Treasury and Planning, has successfully priced a new $2.1 billion, dual-tranche Eurobond of 7-year and 12-year tenors on 15th May 2019 in London, United Kingdom,” reads the statement.

The two tranches are priced at 7.0 percent for the 7-year tenor and 8.0 percent for the 12-year tenor.

Mr Rotich says the money raised will be used to finance the budget and repay Sh75 billion 2014 Eurobond that is due to mature in June.

“The proceeds from this issuance will be used to finance some of the development infrastructure projects, the general budgetary expenditure (in accordance with the applicable legal requirements) and to refinance part or all of the obligations outstanding under the $750 million (2014 Eurobond) due on June 24, 2019 and potentially part of the other debt obligations,” Mr Rotich says.

Last week, officials from the National Treasury flew to the US cities of Los Angeles, Boston and New York and London in the UK for roadshows to drum up support for the new bond.

The growing deficit in the budget has left the government with fewer options to finance its ballooning expenditure and this has made borrowing one of its easiest ways to raise plug the hole.

The inaugural Eurobond was in June 2014 where a total of Sh280 billion was borrowed in five and 10-year tranches.

The government went back for another Eurobond last year where it netted Sh202 billion in 10 and 30-year tranches.

With the new Sh210 billion bond this year, Kenya will have raised in excess of Sh692 billion in three Eurobonds in five years.

In the coming year that starts in July, Treasury says it will explore five new bonds among them Chinese and Japanese bonds as it moves to find new alternatives to satisfy its insatiable appetite for debt.

These new options on its radar include the Islamic financing instruments, green bonds, Samurai and Panda bonds and diaspora bonds over the medium term.

In seeking the new financing options, Treasury hopes to diversify the sources of external debt and reduce over reliance on current sources of debt financing.

“The government will continue to diversify the sources of financing over the medium term by maintaining a presence in the international capital markets,” the budget document reads.

Samurai bonds are yen-denominated bonds usually issued in Tokyo by non-Japanese companies. These bonds are subject to Japanese regulations. On their part, Panda bonds are Chinese renminbi-denominated bonds designed to allow borrowers to tap into China’s large investor base.

Kenya has been increasingly turning to China for debt to fund its infrastructure projects and this has seen China upstage Western countries to become Kenya’s biggest lender.

Islamic financing instruments also known as Sukuk bonds seek to provide sharia-compliant capital and are popular in the Middle East nations while green bonds target lenders who are keen on funding climate and environmental projects exclusively.

On their part, diaspora bonds will target Kenyans living abroad. Usually diaspora bonds help migrants to receive discounts on government debt from their home countries.

Treasury Principal Secretary Kamau Thugge says the new Eurobond will start trading Thursday.

“We are now concluding the issuance process and expect the new bonds to start trading tomorrow,” Mr Thugge said in a text message to the Nation Wednesday night.





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New luxury car sales drop 60pc in Q1

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By VICTOR JUMA
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Sales of new luxury cars dropped 60 per cent in the first quarter ended March on the back of stockouts of BMW, Porsche, Bentley and Jeep brands.

Unit sales of the dealers including DT Dobie and Inchcape Kenya stood at 26 in the review period compared to 65 a year earlier, according to statistics from the Kenya Motor Industry Association (KMI).

Sales performance in the high-end car segment was much worse than in the overall new vehicle market that recorded a 14.5 per cent drop in orders to 2,741 units in the same period.

The industry-wide slump was attributed to difficulty in accessing loans and slow registration by the National Transport and Safety Authority (NTSA).

There were no Jeep, Bentley, Porsche or BMW sales in the review period, resulting in one of the worst quarters for luxury car dealers.

Supply and sales of BMW cars was disrupted after Simba Corporation lost the franchise to rival Inchcape last year. DT Dobie has in recent years gone slow in marketing its Jeep cars.

Porsche and Bentleys have also been out of stock, partly due to global demand and supply dynamics.

Porsche Centre Nairobi says it now has adequate stocks of the 2019 Porsche Cayenne –its fastest-selling car. The new model is priced at $117,000 (Sh11.8 million) inclusive of taxes.

The stock-outs left DT Dobie and Inchcape to dominate the luxury car market in the first quarter. DT Dobie sold 13 Mercedes cars or half of the industry’s total volumes, down from 15 of the German car models it moved a year earlier.

The rest of the sales were by Inchcape which moved 11 Land Rover and two Jaguar models for a total of 13 units, down from 20 units the year before.

DT Dobie could get a major sales boost later this year after the Judiciary published plans to buy 121 Mercedes cars for judges and other staff.





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HF Group borrows Sh1.9 billion at 18pc

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HF is servicing loans worth Sh1.95 billion at a rate of more than 18pc while lending at 10.72pc.



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Child protection must go beyond statutory system

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Child protection must go beyond statutory system

A child needs to first feel safe at home, and then be enabled to enjoy the support and care of the extended community. FILE PHOTO | NMG 

In spite of the legislative, policy and other initiatives to protect children from violence in Kenya, our young ones continue to face physical, sexual, emotional and other forms of abuse.

Every day, media reports paint a picture of widespread violence against children. For example, cases of Female Genital Mutilation (FGM) are still rampant despite efforts by government and various NGOs to end the vice.

The story of 14-year-old Jelida from Meru who died from complications linked to FGM is still fresh in our minds. Not to mention the alarming number of girls who could not sit for their 2018 Kenya Certificate of Primary Education examinations due to pregnancy.

Even more shocking are findings of studies such as the 2015 study by the Kenya Catholic Secretariat, which revealed that violence against children is often perpetrated by people closest to them, who ideally should be protecting them such as parents and teachers.

Most incidents of violence against children go unreported and unrecorded.

They remain hidden for many reasons including fear, stigma, social acceptance and a lack of awareness on where and how to report such cases.

Based on various findings, community-driven responses for child protection yield far much better results than externally initiated efforts.

Child protection systems can only achieve maximum effectiveness when the immediate community level system is vibrant. A child needs to first feel safe at home, and then be enabled to enjoy the support and care of the extended community.

No matter its cultural, economic or social background, every community can prevent violence against children. This entails being well connected with statutory child protection systems and establishing strong community level networks.

Arresting perpetrators is not enough. And so is strengthening mechanisms for evidence preservation and prosecution.

We should go a step further and work on transforming community mindsets, attitudes, beliefs and practices towards violence against children. It is critical to give children and caregivers, information and skills necessary to prevent and respond to violence.

This will enhance reporting and improve their capacity to seek appropriate services and support when violence occurs.

Based on this rationale and building upon our extensive experience working with community-based mechanisms across 26 counties, strengthening well-connected and skilled teams of community child protection champions to create awareness and facilitate participation in preventing and responding to children harms can achieve better results.

This approach complements government’s efforts towards establishing strong community mechanisms for child protection and enhancing caregiver’s knowledge and skills on child rights as well as well-coordinated reporting and referral mechanisms.

We must pool efforts and recognise that protecting children is not simply a matter for statutory protection systems but a responsibility for all.

The writer is Country Directo ChildFund Kenya.



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