Written by Duncan Miriri | From Reuters

Kenya plans to tap international markets again in the new financial year and may opt for an Islamic bond after its debut $2 billion Eurobond was heavily oversubscribed, the finance minister said on Wednesday.

President Uhuru Kenyatta told the same news conference that funds raised via last week’s Eurobond would cut the government’s local borrowing requirement, which would in turn help reduce interest rates.

The Eurobond, split into a $500 million five-year tranche and a $1.5 billion 10-year tranche, drew bids of $8.8 billion. The president and finance minister described the sale as a vote of confidence in Kenya’s economy and said it showed there was international appetite for Kenyan debt.

“In the next financial year, we have programmed some amount we would like to borrow externally through the capital markets,” finance minister Henry Rotich said. Kenya’s new financial year begins on July 1.

“But we are going to diversify, we may look at other (types of instruments) that is like sukuk bond, diaspora bonds or other denominations. So we are still engaging on what other financial products are out there,” he added.

Rotich and the president both said the Eurobond would provide a benchmark for Kenyan firms seeking to access funds on international markets, while also helping the government cut the amount it needs to raise on local markets to fund the budget.

Read more at Reuters