In a significant financial development, Kenya’s Ministry of Finance announced on Thursday the signing of a groundbreaking agreement with a Japanese government-owned insurance company.
The deal, sealed during Kenyan President William Ruto’s visit to Japan, involves the issuance of a yen-denominated Samurai bond amounting to $500 million.
A Samurai bond is a unique financial instrument, denominated in yen and issued in Japan by a non-Japanese entity, subject to adherence to Japanese regulations.
Kenya’s move to tap into this market comes as the East African nation grapples with financial challenges, particularly in light of an impending $2 billion international bond maturing in June.
Despite financial strains, Kenya has recently attracted attention from investors, securing support from international lenders such as the International Monetary Fund (IMF).
This financial backing has alleviated some of the pressure on the country’s fiscal outlook.
In a bid to address its financial obligations, the Kenyan government presented an offer to investors holding its $2 billion bond.
The proposal encourages investors to exchange their current holdings for a new U.S. dollar-denominated bond.
The Finance Ministry detailed that the Samurai bond sale would occur in two phases, each amounting to $250 million.
The funds generated from this initiative are earmarked for promoting electric vehicles, enhancing energy efficiency in Kenya’s transmission network, and other developmental projects.
The bond issuance is anticipated to be completed by June, with the proceeds allocated for the fiscal year beginning in July.
This strategic move is expected to play a pivotal role in supporting Kenya’s economic initiatives and fostering sustainable development.
