Kenya's debut Eurobond pushes up debt

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Nairobi - Kenya's debut $2 billion (R21 billion) Eurobond pushed its total public debt to 57 percent of gross domestic product (GDP) at the end of June, up from 51.7 percent a year earlier, the Treasury said.

The east African nation's total debt stood at 2.37 trillion shillings (26.78 billion US dollar) after Kenya's maiden sovereign bond was issued in June, according to data from the finance ministry seen by Reuters on Monday.

Analysts said the higher level of debt was sustainable because the government had negotiated low interest rates with multilateral lenders like the World Bank.

“The new level should be sustainable in terms of debt repayment because most of it is booked on concessionary terms,” said Alex Muiruri, a fixed-income trader at Kestrel Capital.

A weaker shilling contributed to the upswing in debt as foreign loans denominated in major currencies like the dollar usually go up when the shilling weakens.

The shilling is trading above 88.00 per dollar, having weakened from 87.50 in the same period last year.

Debt as a percentage of GDP is expected to fall in late September when the statistics office updates the base year for calculating output to 2009, which will result in the size of the economy going up. - Reuters

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