African governments return to international bond markets

William Ruto’s first 18 months as Kenya’s president have been haunted by a single date: June 24th this year, when a $2bn sovereign bond is due to be repaid. His cash-strapped government has raised taxes and cut subsidies, as protests have rocked the streets. Now it has bought some respite, at a rather exorbitant price. On February 12th Kenya issued a new $1.5bn bond, maturing in 2031, at a yield of 10.4%. It will use the proceeds to buy back most of the debt owed in June, kicking the can seven years down the road.Governments in sub-Saharan Africa are tentatively returning to international capital markets after a 21-month hiatus. Last year was the first since 2008 when no countries in the region sold a dollar bond, as high interest rates shut them out of the market. The freeze was broken in January when Ivory Coast borrowed $2.6bn at 8.5% and below. Benin then raised $750m at a similar rate. Those bond sales gave hope to other African governments; the high yield on Kenya’s bond gives caution.