Kenyan economy to expand 6.4% in 2015

Kenyan economy to expand 6.4% in 2015

2014-06-05 18:15

Nairobi - Kenya's economic growth will rise to 6.4% in 2015 from a forecast 5.8% this year while inflation in 2014 will be around 7.5%, according to a preliminary prospectus for Kenya's debut Eurobond.

"Inflation will remain in the upper limit target of 7.5% in 2014," said the prospectus, seen by Reuters on Thursday.

Kenyan inflation increased to 7.30% in the year to May from 6.41% a month earlier.

The preliminary prospectus did not give the size, tenor or other details about the Eurobond, which is expected to raise up to $2bn and for which an investor roadshow began on Thursday.

Yerlan Syzdykov, head of emerging markets, bond and high yield at Pioneer Investments, said investors are likely to be willing to overlook political risks associated with east Africa's largest economy if the yield on the bond is appealing.

"We will be assessing the creditworthiness of the country, but given how tight this market is, very much driven by lack of growth stories or yield stories, Kenya will be popular if it is priced reasonably," Syzdykov told a briefing this week.

The Eurobond document said Kenya's cabinet approved the 2014/2015 budget on April 28, allocating $1.33bn for on-going and new road projects and 43.6 billion to energy-related initiatives.

The budget also estimated the net public debt to GDP ratio will decline from 52.1% at the end of this month to 49.8% in 2016 and 2017.

The government will formally unveil details of the next fiscal year's budget next Thursday.