Kenya has entered into a memorandum of understanding with Japan that will see the East African nation issue a Samurai Bond.
- According to the National Treasury & Planning Ministry, this agreement enables Kenya to issue a Samurai Bond totaling US$ 500 million in two phases of US$ 250 each to support E-mobility initiatives.
- Issuance of a Samurai bond was one of the options tabled by the National Treasury in July 2023 as a route to help settle the US$2.0 billion Eurobond maturity.
- With a rapidly depreciating local unit exchange rate against US$ and other hard currencies, the East African nation has been relentless in reducing its exposure to the Eurobond debt and other forex-denominated loans.
“The upgrade of transformers will reduce energy losses in the country’s transmission network. The bond will be utilized during the 2024/2025 Financial Year and is expected to conclude by June 2024,” said National Treasury PS Dr Chris Kiptoo.
Analysts view Kenya’s move to issue bonds in Japanese Yen as a strategy to reduce its dependence on US Dollars. This could help the country manage its debt better, even though the impact might be small in the short term.
Kenya is said to be looking for ways to manage its foreign debt and is thus keen to ditch the US$-US$-denominated loans
While proceeds from the Samurai bond are marked to specific projects in the transport and energy sectors, many see this as more beneficial to Japanese investors and contractors.