NAIROBI: Kenya will issue debut sukuk in the next financial year after it opted to borrow an additional $750 million from its maiden $2 billion Eurobond, said finance minister.
Parliament is set to consider a recommendation by its finance committee to double the government’s external debt ceiling to $28 billion to fund the construction of a new railway, port, roads and power plants.
There were expectations in the market the government would issue a bond compliant with Islamic law or shariah this financial year, partly to reduce domestic borrowing and lower interest rates.
Henry Rotich, the cabinet secretary for the Treasury, said the re-opening of the Eurobond, which is expected to be completed on Wednesday, had given the government time to prepare the documentation for the sukuk issue.
“We will prepare for sukuk but for the next financial year.” He said it would be issued in the financial year ending June 2016.
Kenya’s central bank chief, Njuguna Ndung’u, said last month the country’s public debt was sustainable at 46 percent of gross domestic product (GDP) because much of it was supporting transport and other projects that will fuel growth.
A senior government source said that the re-opened Eurobond was getting good demand from investors who were willing to pay a premium.
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