Kenya: Russia-Ukraine Crisis Cause Eurobonds Yield Increase

Kenya’s central bank maintains its main lending rate at 9%

Kenya’s yields on Eurobonds experienced a sharp rise as the Russia-Ukraine crisis commenced last week, alarming investors who chose safer Western bonds, making Kenya’s plan to issue new debt uncertain. The yields rose by an average of 0.86% last week, one of the sharpest inclines since the bonds were listed in 2014. The same is experienced by Ghana and Angola who saw yields on their ten year Eurobonds go up as well.

The increase was on the seven-year tranche naturing in 2027, up 1.24% to 8.15%. Kenya’s secondary market yields go up when there is heightened risk perception on the debt, causing prices to fall as investors push to offload the Eurobonds.

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“In the international market, yields on Kenya’s Eurobonds rose by an average of 86.6 basis points. Similarly, the yields on the 10-year Eurobonds for Ghana and Angola increased,” the Central Bank of Kenya (CBK) in said its weekly bulletin.

The risk perception on African sovereign debt has been increased since Russian forces moved into Ukraine last week, causing prices of oil and other commodities to spike, and leading to fears of inflation.

Kenya was billed to raise up to two billion dollars at the international debt market before the end of its current fiscal year, in order to meet up with its budget deficit and control inflation. It had suspended the move last year due to unfavourable market conditions and is not constrained to see out the crisis.

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The African Union had previously called for an immediate ceasefire and issued a condemnation of Russia’s invasion of Ukraine, asking Russia to respect international laws. “They call on the Russian Federation and any other regional or international actor to imperatively respect international law, the territorial integrity and national sovereignty of Ukraine,” reads the statement signed by AU Chair and President of Senegal, President Macky Sall, and the Chairperson of the African Union Commission, Moussa Faki Mahamat,

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