In June, Kenya issued bids for transaction advisors with a two-week deadline for those who wanted to express their interest underlining awareness of the need of speed. The amount is marked to be used for infrastructure development.

Tanzania and Uganda are also contemplating issuing sovereign debts. The former is currently seeking a credit rating which is crucial when approaching the international market.

African governments have turned to Eurobonds owing to their longevity, cheaper rate compared to local borrowing and lack of pre-conditions like those given by multilateral financiers, such as the International Monetary Fund.

As at end of June this year Kenya paid $1.4 billion as interest for its $22 billion total debt which is 51.7 percent of the GDP. IMF holds that Kenya’s debt position is healthy despite it being higher than that of its peers, some of whom are beneficiaries of debt relief such as Rwanda, Tanzania, Uganda, Ghana and Zambia.

Ghana’s debt however shot up last year due to public wages. The resultant high debt ratio is said to have contributed to the premium rate the country paid for its sovereign debt. Its public debt increased to 49.4 percent of GDP in 2012, from 40.8 percent in 2011, higher than peers such as Nigeria which has a debt-to-GDP ratio of 18.6 percent. Nigeria used a bulk of its oil revenues to settle its debts in 2010.

The bulk of the Kenyan government debt is domestic at $20.5 billion, with $9.6 billion being external.

The direction of Kenya’s inflation rate is also a concern as the spread between the local and international credit has to be rational. Kenya’s inflation rate has been edging upwards and the short term rates have also started rising, indicating a higher rate for the sovereign debt.

Inflation ratio stood at 6.02 percent as at end of July compared to 4.7 percent in June.