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Concerns that Kenya is Heading towards Default are Ramping Up

The extra yield investors demand to hold the nation’s dollar bonds over US Treasuries indicated a rise to 1,019 basis points on Monday, above the 1,000 level widely considered by bond traders as distressed. The bonds yielded 993 basis points at the close on Friday, according to a JPMorgan index. Yields on dollar bonds due 2028 climbed to 14.6%, on track for a 14th consecutive day of increases, the longest streak since the securities began trading in 2018, according to data compiled by Bloomberg. The shilling has also taken a hit, dropping more than 3% in the past month in one of the worst performances worldwide. Investors had pinned their hopes on syndicated loans, multilateral financing and some support from the domestic market. The government said last week that it was hoping to sell new debt to refinance its 2024 payment, though borrowing remains difficult for junk-rated credits. No country in Sub-Saharan Africa has been able to raise financing through a dollar bond sale over the past year, the IMF said in its Regional Economic Outlook report titled “The Big Funding Squeeze” on Friday.

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