By Stanley Opara with agency report

Monday, 17 Jan 2011

Nigeria’s planned sale of dollar-denominated bonds, if successful, may encourage Kenya to go ahead with its own debut sale of Eurobonds, a sub-Saharan African strategist for Citigroup Incorporated, Mr. Leon Myburgh, has said.

Kenya may still sell debt abroad even as it did not make a provision for a sovereign bond issue in its draft budget plan for the next fiscal year through June 2012, Myburgh said in an e-mailed response to questions on Friday.

“A successful placement of Nigeria’s dollar-denominated bond may prove to be the tipping point to give Kenya the confidence to launch its own bond,” Reuters quoted him as saying.

Kenya, East Africa’s largest economy, more than two years ago shelved plans to sell bonds on the international market after the global financial crisis reduced investors’ appetite for risk. The government is “still studying the situation,” Treasury Economic Secretary, Geoffrey Mwau said on January 12.

“The global environment is still a little shaky,” he added.

Nigeria plans to proceed with a plan to issue $500m of Eurobonds within weeks, Finance Minister, Mr. Olusegun Aganga, said on January 7. The issue was designed to set a “benchmark” to enable banks in Nigeria to access funds, Aganga said.

Citigroup had predicted that the bond offer, Nigeria’s premier attempt to access funds in the global fund market, would attract huge interest from western investors and others from the emerging markets.

Its Chief Executive Officer, Mr. Vikram Pandit, said the economic potential of the country, reforms in key sectors which had strengthened corporate governance and the rule of law, and the growth prospects evidenced by the significant inflow of investments in the last decade, would make the bond a huge appeal for investors.

In this light, the Federal Government had announced Citigroup and Deutsche Bank AG as book-runners for the sale of its $500m Eurobond.

Source: Punch