Kenya is set to offer a new investment opportunity in the form of a Eurobond. This is a type of loan for the government to get funding from international investors. In return, investors will receive regular interest payments until the loan matures, at which time the government will pay back the original amount borrowed.
Here’s how it works in simpler terms:
Eurobond: This is an IOU from the Kenyan government, saying they’ll borrow your money now and pay you back later with some extra as a thank-you for letting them use it.
Maturity Date: This is the date when the government promises to give you back your original investment.
Interest Payments: Think of these as small thank-you payments you get at regular intervals for your loan.
Final Amount: This will be decided later based on how much the government needs and how much investors like you are willing to lend.
The List: The Eurobond will be put on a special list in London, which makes it official and tells everyone it’s a legit investment.
The linear graph shows the projected cumulative interest payments over 10 years for the Eurobond, assuming a steady 5% interest rate., ceteris part bus. This helps to understand how the interest accrues over time, with the total interest paid to investors increasing each year. What happens when the government of Kenya defaults?
For those who invest in this bond, they’ll be paid in euros. The payments will include interest, which is like a fee the government pays for borrowing your money. Over time, these interest payments may change, but the goal is to keep them attractive to investors.