African Bond Sales Poised for Buoyant Year-End -- Update

By Ben Edwards 

African bond sales are poised for a buoyant end to the year.

Kenya followed Ethiopia Tuesday by announcing debt sale plans, seeking to reopen two bonds it issued in June.

African borrowers have already raised almost $9 billion from selling bonds this year, broadly keeping pace with last year's record $11 billion total, according to data provider Dealogic.

Ethiopia earlier Tuesday said it is planning to meet investors about a potential debut dollar bond sale, with a roadshow due to start Wednesday and conclude Dec. 3, according to a person familiar with the matter.

Kenya, meantime, is planning to increase the size of its debut dollar bonds. Bankers working on the sale suggest the bonds should price to yield in the area of 5.25% for those maturing in 2019 and around 6.125% for the bonds maturing 2024. Those bonds are currently trading at about 5% and 5.9% respectively, according to Tradeweb.

The original sale in June raised Kenya $2 billion and was one of the largest first-time issues from an African nation. Low U.S. government bond yields are allowing African borrowers to raise dollar debt at relatively cheap interest rates.

Ethiopia in May was handed credit ratings from Moody's Investors Service, Standard & Poor's Corp. and Fitch Ratings in preparation for a potential deal. The country is rated B1 by Moody's and B by S&P and Fitch Ratings, four and five levels below investment grade respectively. Moody's said its rating reflects Ethiopia's strong economic growth over the past decade.

Deutsche Bank and J.P. Morgan Chase & Co. are the banks organizing the Ethiopia roadshow, according to the person familiar with the matter.

Barclays, J.P. Morgan and Standard Chartered are managing the Kenya sale.

Write to Ben Edwards at [e-mail]

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