Kenyan eurobonds have come off their recent lows following the news that the IMF has agreed to finally disburse a US$235m loan to Kenya as some of the lender’s targets have now been met. The IMF’s disbursements to Kenya now total US$1.21bn for this programme, which was approved in April last year. The IMF did, however, note that the risk for the programme is skewed to the downside. Disruptions from the war in Ukraine, tighter global monetary conditions, and rising food insecurity are all risks facing Kenya that are offsetting what has been a relatively robust economic recovery so far. These downside risks, as well as the fact that some of the programme’s goals were delayed, suggest that Kenyan eurobonds are likely to remain under some significant pressure. The country remains at high risk of debt distress, and unless it can reduce its vulnerabilities, further disbursements from the IMF could be delayed, and yields on its eurobonds could continue to surge.
