Kenya’s Debt Repayment to hit 1 Trillion Shillings in 2018/19

Medium Term Debt Management Strategy tabled in the August House indicate debt repayments for Kenya will hit one trillion shillings in 2018/19 financial year.

This will be 54.4 percent of 1.85 trillion shillings in expected total revenue in the financial year period; propelled by a significant refinancing risk.

Treasury projections indicate that huge portion, 81.48 percent or an equivalent to USD 9.72 billion will be towards domestic debt payment obligations.

To ease the refinancing and exchange rate risk, Treasury intends to slash the share of Treasury Bills to 13 percent of total domestic debt from current 35 percent and contract medium-to-long term bond with 15-30 years in the next three financial years.

“We end the week on a slower note on account of the primary auction next week. Our initial expectation on the primary is that it will settle 20bps to 30bps above the yield curve on both the FXD1/2010/15 and FXD2/2013/15,” said analysts from Genghis Capital.

The overnight money-market rate and currency have been under slight pressure in the last few days.

The interbank rate, at the end of the CRR cycle, closed at 4.6 percent while the local unit dipped slightly to 101.25 driven by a rise in corporate dollar demand coupled with outflows from the capital markets.

“This should not be a cause of concern in the short-term; the largest headwind in the horizon for the apex bank will be dividend payments to be made in May and June dividend payments. The infrastructure bonds stayed flat yesterday with subdued demand and no movement in the yields, the latest issue IFB1/2018/15 remained at 12.15/12.05 percent,” added Genghis Capital.