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Bond Market News
Kenya’s Bond Buyback May Constitute a Default, says Moody’s
August 3, 2023
Kenya’s dollar bonds ticked lower by ~1 point after Moody’s warned that a planned buyback of half of Kenya’s 6.875% 2024s might constitute a default. Kenya’s President had earlier announced it will buy back half of the $2bn outstanding bonds. However, vice president and senior credit officer at Moody’s David Rogovic has warned that redeeming the bonds at a price below par would constitute a “distressed exchange” and hence constitute a default under Moody’s definition. He pointed to the need for more details about the buyback before a decision is made but believes that the Kenyan government is able to repay the bond. As the country’s hard currency reserves currently stand at only $7.4bn, investors have cast concerns over Kenya’s debt levels, worrying that the country will be forced to restructure their debt like other African nations such as Ghana and Zambia.
Kenya’s 6.875% 2024s have ticked 0.3 points lower and are trading at 95.1 cents on the dollar currently, yielding 12.9%.
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