Kenya Eurobond yield at month’s low as maturity nears
The yield on Kenya's Eurobond due in June experienced a decline to the lowest level in about a month after the deadline for a coupon payment had passed. The yield dropped by 64 basis points to 13.513% in Nairobi at 2:26 p.m., according to data from Bloomberg.
Kenya had until December 24 to make the interest payment for the $2 billion debt issued nearly 10 years ago at a rate of 6.875%. The price of the maturing Eurobond has demonstrated volatility in secondary market trading as investors seek a potential premium.
The 10-year sovereign bond, issued in June 2014 and traded on the Irish stock market, has witnessed weekly yield fluctuations of more than a percentage point since the start of November. In contrast, the other five outstanding Eurobond issues, maturing between 2027 and 2048, have experienced more modest yield movements.
Key Takeaways
The relationship between bond prices and yields typically follows an inverse pattern, where an increase in one rate corresponds to a decrease in the other. In the secondary market, bonds are traded at a premium or discount to their face value—the original value or cost of the bond at its initial issue. Very recently, the International Monetary Fund (IMF) reached a staff-level agreement with Kenya, unlocking immediate access to a $682.3 million tranche and bolstering the current lending program by $938 million. Pending approval from the executive board of the Washington-based fund, Kenya is set to gain access to a total of $3.88 billion. This additional funding will increase its total support under the existing Extended Fund Facility and Extended Credit Facility arrangements to $4.43 billion, according to the Fund.
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