Special to USAfricaonline.com BUSINESS & FINANCE:
Kenya plans to raise between $500 million and $1 billion in its first international bond sale to help finance renewable energy projects, Prime Minister Raila Odinga said.
Kenya joins Angola, Tanzania, Nigeria and Senegal among African nations planning to tap the international bond market for the first time as stronger growth in developing economies and higher yields on debt securities help lure investors. Kenya canceled a planned $500 million bond issue in 2008 as the global financial crisis caused credit markets to shut down and raised the cost of borrowing.
“We must ensure our debt build-up does not compromise the government’s ability to service its external obligations while at the same time providing adequately other government expenditure,” Odinga said.
The bond proceeds will help with a government target to double total installed power capacity over the next three years, exploiting mainly renewable sources such as geothermal projects and wind farms, said Odinga.
Drought last year lowered water levels in hydropower dams that supply 70 percent of the country’s electricity, leading to two months of power-rationing that crimped economic growth. The shortage highlighted that “the country can no longer continue to rely on hydro-electric power supply,” said Odinga in the capital, Nairobi.
The east African government is evaluating the size of the bond issue and its “structure” to ensure the nation’s debt is kept at a manageable level, Odinga said.
Credit Ratings: Kenya has a credit rating of B from Standard & Poor’s, five levels below investment grade, and is ranked one level higher at B+ by Fitch Ratings.
Tanzania, Kenya’s neighbor to the south, will revive plans to raise $500 million in Eurobonds once the country has appointed advisers and received an international crediting rating, Finance Minister Mustafa Mkulo said on Jan. 28. Funds raised through the sale will be used to finance infrastructure projects, Mkulo said. ref: By Sarah McGregor. Feb. 3, 2010 (Bloomberg) —