Investors to Earn Sh323bn interest from Kenya’s Eurobond II

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Nairobi shrugged off a ratings downgrade and loss of access to an IMF standby credit facility to raise a Sh202 billion ($2 billion) bond that added impetus to recent concerns over the rate at which Kenya is accumulating debt, Business Daily news has reported.

The Eurobond, the second in a span of four years, will cost taxpayers a total of $3.2 billion (Sh323 billion) in interest payments during its lifetime of up to 30 years, according to early calculations and the International Monetary Fund (IMF) said Kenya needs a credible plan to tackle its fiscal deficit, which is the main driver of borrowing.

At Sh323 billion, the interest payments, are equivalent to the cost of building the Mombasa to Nairobi segment of the standard gauge railway, and is the clearest indicator of the high cost of borrowing from the international bond markets, which President Uhuru Kenyatta’s government has preferred over concessional loans that carry lower interest rate and can be paid on reducing balance terms.

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