Forex reserves drops by Sh22bn on Eurobond payments

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The Central Bank of Kenya (CBK)  foreign exchange reserves’ have dropped by Sh21.5 billion ($201 million) in the past two weeks following the interest payments on the Eurobond floated in May 2019.

According to the latest data from CBK, the reserves had dropped to Sh891.4 billion ($8.331 billion) as of May 28 from Sh912.9 billion ($8.532 billion) on May 14.

“The CBK usable foreign exchange reserves remained adequate at USD 8.331 million (4.99 months of import cover) as of May 28. This meets the CBK’S statutory requirement to endeavor to maintain at least four months of import cover,” CBK said in their latest weekly briefing.

The $2.1 billion Eurobond issued on May 15, 2019, came in two tranches $900 million (to paid in seven years), and $1.2 billion (to be paid in twelve years) attracting seven and eight percent interest rate per annum respectively.

After every six months i.e., in May and November, the interest rates are paid out as $79.5 million (Sh8.5 billion).

Apart from payment of the Eurobond, CBK in the last two weeks might have used part of the money to service other foreign debt, make payments for imports on behalf of the governments or boost the shilling in the sale of hard currency.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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