"Kenya\u2019s eurobonds plunge as President Ruto touts debt relief"

" Kenya\u2019s eurobonds plunge as President Ruto touts debt relief \r\n\r\nKenya\u2019s eurobonds plunged Friday after President William Ruto said rich countries should work toward \u201ca new sovereign debt architecture\u201d to provide relief for poor nations.\r\n\r\nWhile Ruto didn\u2019t refer to Kenya specifically, investors were \u201cspooked\u201d by his remarks on debt restructuring, according to Yvette Babb, local and hard currency portfolio manager at William Blair.\r\n\r\nYields on the nation\u2019s dollar bonds due 2032 soared 41 basis points to 12.36%, the highest in four months on a closing basis. The extra yield investors demand to own Kenya\u2019s eurobonds rather than US Treasuries widened 47 basis points to 810, according to JPMorgan Chase & Co. indexes.\r\n\r\nRuto said a new debt framework for should \u201cextend the tenor of sovereign debt and provide a 10-year grace period\u201d for highly-indebted poor nations.\r\n\r\n\u201cThe global community must therefore develop a debt restructuring initiative that does not wait for nations to plunge over the cliff before providing relief,\u201d he said in a speech to the UN General Assembly.\r\n\r\n Debt Burden \r\n\r\nKenya\u2019s debt burden has become a focal point for investors as the country faces skyrocketing energy and food import bills, as well as low foreign-exchange reserves.\r\n\r\nThe government has hired lead managers to advise on issues surrounding the repayment of $2 billion of bonds due next year. Ruto in June vowed to buy back half of the 2024 eurobonds before the end of this year.\r\n\r\nS&P Global Ratings in August warned that Kenya\u2019s ratings may be lowered \u201cif we perceive any potential debt-repurchase operations to be akin to a distressed exchange.\u201d Moody\u2019s Investors Service has also cautioned that redeeming the bonds at a price below par value would constitute an economic loss to investors and treated as a default.\r\n\r\n\u201cI think investors are still pondering the way forward with the maturity in June, what the implications could be in terms of Kenya\u2019s external position,\u201d said Gergely Urmossy, an emerging-markets strategist at Societe Generale in London. \u201cBased on the market pricing, I think many fail to see an obvious catalyst to organically generate extra hard currency funding.\u201d\r\n\r\nThe country\u2019s current foreign exchange reserve position \u2014 $7.07 billion on Sept. 14 \u2014 \u201cdoes not provide a comfortable outlook for managing its external financing needs,\u201d according to Mohamed Basha, head of macro research at EFG Hermes.\r\n\r\nKenya\u2019s forecast of a wider budget deficit in the year through June 2024 is \u201canother cause of concern for investors as it means there is need for more financing,\u201d Basha said in an emailed response to questions.\r\n\r\nKenya is at high risk of debt distress and in February 2021 signed a 38-month IMF program to help reduce debt vulnerability. Kenya and the IMF in May agreed to extend the duration of the program by 10 months to April 2025."

"Kenya\u2019s eurobonds plunge as President Ruto touts debt relief"

Naira Ends Week Stable as External Reserves GrowAMP

Top 10 Copper Exporting Countries in AfricaAMP

Too Big to Merge? Exxon and Chevron Might Think SoAMP