Churchill Ogutu
@ill_dduor
Followers
5,049
Following
1,108
Media
504
Statuses
6,241
Africa economies. Buyside, bias towards FI and FX. Books. Data torturer and policy critique equals occasional rabble-rousing threads.
Nairobi,Kenya
Joined May 2011
Don't wanna be here?
Send us removal request.
Explore trending content on Musk Viewer
GOOD TIMES WITH BAMBAM
• 187799 Tweets
Chiefs
• 106704 Tweets
Cowboys
• 94555 Tweets
Ravens
• 85580 Tweets
連休最終日
• 78829 Tweets
49ers
• 58609 Tweets
Falcons
• 52589 Tweets
Susana
• 42960 Tweets
Atlanta
• 38481 Tweets
Mahomes
• 36865 Tweets
Rams
• 36261 Tweets
Paredes
• 31013 Tweets
Cousins
• 21238 Tweets
Maha Paropkar Diwas
• 20447 Tweets
Serving Humanity
• 20063 Tweets
GARIME TOP DOS
• 19476 Tweets
Kelce
• 17664 Tweets
maria becerra
• 17288 Tweets
KARIME COLUCCI
• 16668 Tweets
KARMA IS GALA MONTES
• 15377 Tweets
#KCvsATL
• 10669 Tweets
#LaAcademiaDisney
• 10033 Tweets
Pinned Tweet
'It's not that we have a short time to live; but that we waste a lot of it'
- Lucius Annaeus Seneca
1
24
81
#BondInvesting101
Due to public demand, I (belatedly) share some of the concepts when it comes to bond investing.
PART 1: Concepts of bond investing
(1/n)
32
508
1K
A tale of two cities. Kenya and Tanzania primary, yesterday.
-> KE received KES 132.3Bn (USD 1.2Bn) in bids, a perf. rate of 176.3% and weighted rate of 12.965%
-> TZ received TZS 531.6Bn (USD 229.6Mn) in bids, a perf. rate of 382.4% and weighted rate of 11.9765%
A thread
86
335
899
Why are we borrowing KES 346bn MORE yet it was just Friday that GoK made known its intent to reduce the budget by KES 346bn? 🤔
17
222
371
One overarching argument by proponents for 16.0% fuel VAT rate in
@NAssemblyKE
earlier today was that raising rate of tax will yield higher tax revenue (akin to a flicker of a switch).
...Yanis Varoufakis offered a cautionary tale in his 'Adults in the room' book.
12
110
152
Lots to unpack in T-Bill issues this FY24 but some overarching themes;
1. "unobservable" cut-off yield is the yield that matters
2. maturities > borrowings
3. GoK has 'lost market access' to longer-dated domestic issues
🧵
5
42
114
There is nothing like Kenya having odious debt
Those who claim it, have failed miserably to prove it. Sensationalism at best
It is just a case of lack of visibility in proceeds of debt. Plain and simple
[Pic from
@africalegal
latest handbook on Understanding Sovereign Debt
21
44
90
One fine day in May 2016 (a day after his 31st b'day), I sent
@GeorgeBodo
some 2-page analysis on KCB FY15 results.
He gave me brutal feedback 🤣 which in a way sharpened my analytical skills but now in macro. He did not entertain mediocrity by analysts
1 year on, continue
9
25
90
Kenya saw record KES 16.5b in secondary bond market last Thursday. In USD terms, that was $111.9m
Same day, Uganda recorded UGX 437.0bn ($116.4m).
@NSE_PLC
put a press release but
@BOU_Official
did not.
Why?
Kenya's was one-off
Why?
🧵
1
37
87
Seems like that $244M IMF third-tranche disbursement to Kenya may not happen in this fiscal year
A hole on Kenya's fiscus, albeit marginally, but the undertone speaks volumes
3
33
84
@reubenmuhindi
This issue crops up every other world cup, whenever Argentina is involved
Blackout: How Argentina ‘Eliminated’ Africans From Its History And Conscience
http://t.co/RcUOq6rXlW
19
216
270
2
11
84
Qn1: GoK went to the market to sell a cow for 100k
They sold it at 97k (97% pricing)
For yield, let's use an analogy. The cow produces milk worth 9,750/- each year. So the return each year for the buyer is 9,750/97k. (10.375% yield follows a similar principle)
@MwangoCapital
@ill_dduor
@WehliyeMohamed
@MihrThakar
@raziakkhan
@alykhansatchu
@coldtusker
@DavidNdii
@AginaAby
@Markbohlund
@CharlieTTEcon
@MwangoCapital
could you please explain for laymans like me the first two points:
1) What does pricing 1.5 usd Eurobond at 97% mean? With 10.375% yield
2) Amortization of 3 equal installments
Thanks
1
1
5
3
33
84
Dear
@KeTreasury
KES 2.2bn + KES 80.4bn + KES 6.9bn CANNOT BE KES 147.8bn
Please look into the Estimates of Revenue, Loans and Grants and adjust lower FY24 Revised Estimates II accordingly. Thanks
3
63
80
There is a pattern here
Its not a coincidence that a National Tree Planting Day is preceding a Staff Level Agreement (SLA) with the IMF
Nov 2023:
RSF's invisible hand 😅
6
58
79
Treasury CS is due to table the FY22.23 budget statement next Thursday.
Lots of work before then BUT I have my doubts
It was not meant that way. In fact, the budget cycle was on track...until the 'Hatupangwingwi moment' in early Dec 2021
A thread
Public Notice
@BaloziYatani
Cabinet Secretary
@KeTreasury
&
@Planning_Ke
will present the Budget Statement for the FY 2022/23 to the National Assembly on Thursday 7th April, 2022 from 3.00 p.m.
Read more:
9
27
46
3
43
68
Ahead of IMF Exec. Board's approval of Kenya's third disbursement later today, I would be remiss not to preempt some of the salient points.
A good starting point is the quantitative performance criteria (QPC)
1/10
2
34
63
A bit late to the party, but after torturing some data/info, I can weigh on the delay/no funding public discourse
To cut to the chase: Counties may not have received equitable rev share in March 2023
I really do hope I am wrong
Starting point. Last week's Gazette issue
1/16
3
28
62
I would like to weigh in with my two cents on the latest IMF Staff report on Kenya
A thread
@genghiscapital
@AmbokoJH
@KimaniMuiruri9
@Ramah_Nyang
@Winnygloria
@alykhansatchu
@jmosoro
@IEAKwame
@DavidNdii
@raziakkhan
@RencapMan
@emsovdebt
5
27
60
Exciting week ahead with Kenya's two-leg liability management operation
1st leg: Tender offer (Buyback)
2nd leg: New Eurobond
On the back of the tender offer (1st leg) launched last Wednesday, today we get details of its max amount following pricing of the Eurobond (2nd leg)
4
31
59
@VictorKiprop_
Lol, and correct!
I remember I had a tight schedule between meetings (Feb 2022) and I stopped by a restaurant for lunch. Ordered the quickest ready meal available (rice and beef) and 15mins later, they brought me a plate with 'everything'! Never been scandalized
2
3
58
Lots to unpack from the WB presser, but I focus on the highlighted
Done some math from WB projects/programs currently in the pipeline to Kenya over FY24 - FY26
Seems WB is telegraphing some $1.5b - $2bn DPO (P500912 my hunch), assuming the 3 (green) have commitment financing
3
16
51
The answer lies partly in Kenya's fiscal framework, that tends to be less clear to most folks.
Let me take FY25 for instance.
The initial budget spoke of borrowing KES 597.0bn [Para 63 on Page 52 ]
This borrowing was in *NET terms.
- Foreign - KES
@ill_dduor
2023/2024 Actual Receipts for Domestic debt 795B is not tied to any project and not approved by parliament for development. Total External loans & grants for Development approved by parliament was 315B yet we received actual receipts of 705B (where did 390B go to). Nipe 20mks.
0
0
1
10
22
51
@MwangoCapital
@AmbokoJH
@bankelele
@DollyOgutu
@MaudhuiHouse
Main reason GoK coffers are low - June to August - is it was priced out of Eurobond in FY21/22.
AND that's the proximate cause of the lagged capex spend and county equitable share last FY. If there's a replay of FY20/21 - counties claiming - chickens will come home to roost!
2
20
50
Looking at the latest 9M cumulative tax revenue this fiscal year, it is evident that KRA, or is it KRS, will miss its target.
To meet the target, KRA has to average KES 238.3b per month in April through June.
Fair enough, Apr and June are high-yielding months
(1/6)
5
19
51
Kenya offered the first infrastructure bond (IFB) this calendar year, the second this fiscal year.
Bond tenor at 19years and maturity year of '41, with 50% amortization. Amount on offer: KES 75.0Bn (USD 660.0Mn).
1
6
42
Open Market Operations (OMO) watchers have been intrigued there has been a cumulative KES 169.4bn liquidity injection in the last two sessions (A record, as per my tracking)
Dovetail with last week's jumbo IFB bond sale
Jury is still out to this chicken-and-egg sequencing 😉
8
23
48
One confusing item off FY25 Supp I is the assumption that fiscal deficit revises from initial 3.3% to 3.6 of GDP?
But has it really moved up by just 0.3% to 3.6% of GDP, considering
- Finance Bill 2024 lowered revenue by KES 344.3bn (1.9% of GDP)
- which was offset by Supp I
5
37
47
This staggering loan looks more of a multi-year arrangement and/or multi-country facility by Afreximbank
Otherwise by now, the budget docs would have penciled in this whooping $3.0b expected disbursement for the current FY22/23
2
18
46
What is the use of having ceilings in Budget Policy Statements, if months down the line they are exceeded?
BPS ceiling: KES 2.253tn -vs- BAC recommendation: KES 2.308tn
The same protagonists almost pulled all stops to reduce FY22/23 budget by KES 400bn, what changed since? 😅
The committee recommends that planned expenditure be increased by Kes 80.7 billion (Kes 56.5 billion being increase in recurrent, Kes 24.2 billion being increase in development spending). In effect, proposed total expenditure for 2023/24 increases to Kes3.68 trillion (2/5)
3
5
13
4
27
44
I found this characterization, 'Power without control', to be the most deplorable.
Article 1 of the Kenyan Constitution has given some folks a serious character development
“Treasonous criminals” and “digital wankers” standing on business while Harvard and Oxford PhDs ridicule them.
Kenyan youth have taught a master class on how to be active citizens
450
12K
28K
1
21
43
As per latest
@KeTreasury
data, tax revenue receipts in Dec 2021 hit a monthly record at KES 180.8Bn
Dec is traditionally one of the outlier months in tax revenue collections, the others being Apr, June and Sept
2
15
41
Kenya IMF 5th review due today
Broadly, IMF Board is expected to approve the EFF/ECF for a combined SDR 306.7Mn (USD 415.4Mn or KES 58.8bn; 14th July FX rates)
Lots to digest around the Performance Criteria and Structural benchmarks, more so the newer proposals
1/7
3
21
41
The FY21/22 Supplementary budget will see an increase of KES 121.1Bn in the overall budget.
From KES 3.64Tn approved, to KES 3.76Tn.
The Supp by the numbers
1
24
40
There are a number of things
@otienowill
got wrong on his tiktok video.
I'll focus on three
1. In FY23.24, there are not just two principal debts coming due
2. GoK does not rely on tax revenue to refinance/retire bonds
3. Sensationalizing haircuts
🧵
Folks, please let us observe lane discipline
Here
@otienowill
redefines (bond) haircut as "ANY account that is in the bank, you go and chop it off" 🤔🤦♂️🙄
GoK's fiscus is not in the best of shape; but not a license for Wanjiginomics! (sensationalism)
1
3
19
3
23
41
Kenya becomes the 5th African (10th globally) country to tap the RST
1. Rwanda (Dec-22): $319m
2. Seychelles (May-23): $46m
3. Senegal (Jun-23): $324m
4. Niger (Jul-23): $132m
5. Kenya (Jul-23): $551.4m
I think under Group B interest: SDR rate+75bps margin+25bps service cost
6
22
38
FY24 tax revenue was lowered by KES 250.0bn; whilst non-tax revenue increased by KES 81.5bn
With 11M23/24 tax revenue at KES 1.929tn, this means June tax collections needs to be at KES 315.4bn to hit the FY24 Revised II target of KES 2.244tn. Tall order, not that scary
1/2
3
18
40
For the layman on these streets who get lost on yields.
NB: there's an inverse r/ship between bond yields and bond prices. If the yield > coupon rate of the bond, the bond price is lower than 100!
The comparable yields (end 2021 vs y'day) and their bond prices for KE eurobonds
1
13
38
GoK better have a plan of conducting another liability management operations on this Eurobond a few fiscal years down the line... 6.875% to 9.75% is nuts!
Optics from GoK coming days: 'Investor confidence in GoK is high with a 4x 'demand'' 😅
Kenya Eurobond issuance final position:
1. Yield at 10.375%
2. Ticket size at US$1.5 billion
3. Coupon: 9.75%
4. Book size at > US$5.0 billion
Was it worth the venture? The price is fairly steep considering we are retiring a 6.875% note.
Anyway, first major hurdle for the week
17
80
121
6
22
35
Latest numbers: Supplementary Budget Estimates No. 1
Point 7 iv)👇
"Overall fiscal deficit ...has been revised from ...4.4% of GDP to *5.3% of GDP"
Kenya is taking the necessary fiscal consolidation that will place the economy in the right footing. We have strengthened our fiscal discipline — with the budget deficit reduced to 4.4 per cent. With these efforts, we look forward to an improved and sustained economic performance
192
132
1K
3
20
36
unlike the other previous 4 IFB sales, this time round the market was less-liquid, going by CBK's no-show at the Open Market Operations.
With the pent-up demand for IFBs, investors nonetheless tendered KES 132.3Bn in bids, KES 119.8Bn being competitive bids
1
5
34
Ifikie those sensationalist Prophets of Doom!
Chair of the Presidential Council of Economic Advisors
@DavidNdii
on the Eurobond:
"As of now, the 2024 Eurobond is fully funded...The refinancing is fully funded...we have actually been very proactive in ensuring that we secure all the funding"
5
28
66
8
11
37
"T-Bill and chill" is the new buzzword in markets😅😎
A 10-year bond has been reopened at a coupon rate of 16%. At the same time, this week's Tbill auction show the 182-day & 364-day interest rates at 16.46% and 16.49% (both rates are higher than the 10yr bond). For how long will our yield curve stay inverted? Will it correct?
7
14
29
1
8
36
Looks like the competitive bids were anything but conservative, what with the market weighted average rate of 13.036%.
CBK, as the fiscal agent, accepted KES 86.1Bn of the competitive bids and KES 12.5Bn, for a total sale of KES 98.6Bn (USD 868.1Mn)
1
6
32
Results for the tender offer are out!
Max. Acceptance amount increased to $1.443b
Valid tenders received - $1.485b
@Ramah_Nyang
Even as we await the final results of the tender offer (KENINT 2024 buyback), seems like GoK settled for a maximum tender size of USD 1.4bn (70.0% of KENINT 2024)
Possibly factoring the net amount received:
Amount received (97.27% * 1.5b = $1.459b) minus the LMs' fees
1
22
31
1
29
34
Even as we await the final results of the tender offer (KENINT 2024 buyback), seems like GoK settled for a maximum tender size of USD 1.4bn (70.0% of KENINT 2024)
Possibly factoring the net amount received:
Amount received (97.27% * 1.5b = $1.459b) minus the LMs' fees
Thank you all for joining us on the
#MwangoSpaces
.
Special thanks to
@Ramah_Nyang
,
@AmbokoJH
,
@Dicksonmagecha
, and
@ill_dduor
for speaking.
Here is a recording of the Eurobond conversation for you to listen to.
2
10
34
1
22
31
The start of the current IMF programme was met with the hashtag
#IMFstoploaningKenya
which spread like wildfire 😂😂. That online campaign spoke more to the downside of IFI lending (conditions attached, dearth in visibility on where program loans funds) and the usual (GoK
The major fault I find with IMF is caring less about how money is spent, but caring too much how money will come in. Too much pressure to raise revenues but zero effort in ensuring accountability, yet this was also part of the deal. IMF is not our friend, but we know who to blame
11
218
242
1
23
30
FY25 fiscal framework (Initial -vs- Revised) following the Committee of Supply session yesterday
The only change here is the assumed KES 47.3bn increase in the Affordable Housing Fund Levy to be collected in FY25. [This has in turn increased target spending for the Housing Devpt
FY25 fiscal framework (Initial -vs- Revised).
By the numbers.
[Nominal GDP now at KES 18,054bn from previous assumption of KES 18,015bn]
Explaining the 4 broad adjustments (yellow highlights)
1. KES 146.3bn. Spending cut to the national govt
- Treasury tabled a cut of KES
4
25
23
9
16
33
The devil is always in the details
Customs Duties are usually passed at EAC level, whereas Finance Bills have been Kenya-specific
I have been in the camp that KES 346.7b additional revenue = KES 301.7b (Finance Bill 2024) + KES 45bn (Customs), but lately I've made peace with
3
23
33
@AmbokoJH
Might you know when
@KRACorporate
's 9th Corporate Plan (FY25 - FY27) will be published/publicized?
1
1
32
@VictorKiprop_
Yebo! There is a saying that whatever you throw on Ugandan soil, grows the next day (in reference to their fertile land) 😅
1
2
32
Not to preempt anything ahead of the IFB auction today, but I noticed that unlike prior IFB period of sales, liquidity this time was mostly 'normal', going by
@CBKKenya
actions in the Open Market.
To be sure, CBK stayed out of OMO (Open Market Operations)...
3
11
31
🧵on IMF financing to Kenya
- SDR
- How IMF is financed
- Kenya's quota
- General Resource Account (GRA) and Poverty Reduction and Growth Trust (PRGT)
- Current IMF financing to Kenya
Conclusion: Kenya WILL NOT access more IMF funding
1
15
29
Some of the docs the Senator is demanding are accessible via this link
In the Bid Documents
Annex 1 - Model Master Framework Agreements
Annex 2 - Tender Terms and Conditions
Annex 3 - Bid Form
Annex 4 - Form of Bid Security
Busia Senator, Okiya Omtatah Okoiti, is demanding full disclosure on the terms of the government-to-government fuel deal entered between the Kenyan government & the Gulf majors. He has written to Energy CS, Davis Chirchir, & his Treasury counterpart, Njuguna Ndung'u.
13
163
274
4
18
30
Tucked in the Consolidated Fund Services budget is usually this fine print
"Net domestic borrowing assumes 100% through bonds"
According to the National Treasury, the govt borrowed only KES 10bn in July domestically. A quick glance at the gross borrowing in Treasury Bills and Bonds give a way higher figure of around KES 116bn🤔. It's not adding up
Seems like they didn't include the Treasury Bills🤔
7
17
26
3
13
31
Two things stand out for me re impact of Finance Comm. Report from this National Treasury advise.
1. The issue of costing the Finance Bill 2024
2. Expenditure variations during the budget cycle
3
27
30
Julians, what you're saying is that the authorities not authorized to speak - the President and the CBK Governor - should tone down their open mouth operations! 😅
During the Nov 9th State of the Nation Address, President William Ruto said a US$300.0M buyback on the US$2.0 billion eurobond would be executed in December.
On Dec 5th, the CBK Governor said GOK was banking on a disbursement from TDB, within the first half of Dec, to execute
29
130
234
5
24
29
This is big pivot, considering that 3 months ago, the same paper was trading at 16.6% levels, which means that for a face value of TZS 1Mn, investors paid much lower than that amount
IMO, once TZ rolls out its YC, we'll see a convergence of prices smoothing out the extremes
6
6
27
Prolly the best way to look at the Housing Fund is not to draw comparisons with NSSF or NHIF, but with Petroleum Development Levy Fund, as it is domiciled within a parent Ministry/Dept
The way PDLF was used willy nilly - for fuel subsidy, SGR - that may be HF's main drawback!
0
15
27
It is not lost that the 3-year tenor bond is a non-benchmark bond.
Simply means that the bond's yield at no point will be considered in the yield curve. Similar treatment as IFB issues
Let me not read much into this 😅😅😅
GOK is back in the market with a 3 year issuance seeking Kes 20.0 billion. In the last auction, a 15 year was cancelled. Period of sale runs between April 26th & May 9th.
5
27
42
5
10
28
At a weighted average rate of 12.965%, the coupon rate for this specific IFB is the highest for the IFB series, higher than the 12.737% for the IFB issued in September last year and maturing in '42.
I expect outsized activity for this paper as it gets to secondary trading
2
6
26
The auction resulted in a yield of 11.9765%, for a bond paying a coupon rate of 15.49%.
Thus, for a face value of TZS 1Mn (USD 432.1), investors will part with TZS 1.29Mn (USD 556.9) which is a ton of a premium, IMHO.
1
5
27
Before concluding this part, it is worthwhile to note that GoK can float the bonds domestically (that is, listed on the Nairobi Securities Exchange)
or
It can 'tap the international markets' and float a Eurobond. Difference is that Eurobonds are not KES-denominated
(23/n)
8
3
27
The fact that it came out this week dangling an IFB TAP Sale, while another primary bond sale is ongoing, by itself sent the wrong signal: GoK is desperate
IFB1/2023/17 tap sale results are out.
The government received Kes 5.12 billion worth of bids against the target Kes 10.0 billion (51.2% performance rate).
Tight environment...Market signalling need for GOK to go back to the drawing board on what it's offering
9
19
44
2
14
28
Annexes 1 and 2 of the Circular reveals a lot
1. From National Treasury's perspective, original FY25 spending by the national government is KES 2,378.4bn YET The Appropriations Bill 2024 (I suppose also the Appropriations Act 2024, yet to be publicized) has it at KES 2,392.8bn.
Treasury gives Ministries, Departments & Agencies, Judiciary, Parliament, Constitutional Commissions & Independent Offices until C.O.B., Monday, July 8th to submit new budget estimates for FY 24/25
Aim: To help meet the financing gap occasioned by the rejected Finance Bill 2024
1
21
30
1
14
28
Tanzania re-opened a 20year bond (552/20) maturing in '40. This was the 7th successive bond re-opening, since TZ pivoted to re-openings late Nov.
The overarching aim of bond re-openings is to concentrate liquidity in a few papers, as it builds a yield curve
1
6
25
Just for the record, what is being meant by "VAT Refunds" is actually "VAT Expenditure"
Whereas Tax expenditure in calendar year was KES 393.6bn, VAT Expenditure for domestic goods/services was KES 248.3bn
On the other hand, VAT refunds have been to the tune of KES 20.0-30.0bn
President
@WilliamsRuto
:
“About KSh400 billion is spent on tax expenditure every year, especially on VAT refunds, a process that is largely opaque, and with limited accountability. Within 90 days, I will be working with Parliament to provide a legislative and regulatory
33
52
173
2
21
27
The Governor nailed this.
There is an inordinate view about FCY deps, which misses the point. Tucked in the M3 money supply stats is the Net foreign Assets, which lays banks' FX underbelly.
@njorogep
raised to the fore FX assets side of NFA, debunking local $-bond issuance
Dr Patrick Njoroge on the proposed issuance of a $ denominated bond
"Issuance of a dollar denominated bond locally is not a slam dunk, it is not a sure fire. There's been nothing off-trend in the growth of foreign currency deposits. The concerns are misplaced"
3
27
42
3
5
25
Crazy devpt in y'day's Open Market Operations; close to KES 100bn injected by CBK (via 7-day reverse repo)
Would have made sense if last week's T-bond sale flew off the shelf.
Still working out the thesis, but one thing is clear: horizontal repo hasn't taken off post CSD intro
3
14
25
"The Government will review the structure to improve its progressivity and harmonize the PIT top rate with the CIT rate during the Strategy period"
Assuming CIT rate is lowered to 25.0%, a PAYE top rate at 25.0% will offer a huge relief to Kenyans. One hit in the draft MTRS!
Govt proposes to revise the personal income tax rates. Coming shortly after the introduction of the two new rates via Finance Act '23 (32.5% for Kes 500k - Kes 800k & 35.0% for >Kes800k), one wonders about tax policy coherence & predictability
3
25
41
3
12
24
The augmentation results in additional $309.57m under ECF/EFF
w/o augmentation: SDR 235.85m ($312.82m)
w augmentation: SDR 469.25m ($622.39m)
Also last week's SOTN indicated some $300m to conduct the partial buyback for Eurobond 2024
I have not said anything😅
Dr Ndii hinted at a US$650M (Kes 98.9 billion) boost on the Kenya-IMF program, conclusion of the 6th reviews has actually yielded a staggering US$938M (Kes 142.8 billion).
My hunch was about 90.0% of quota, it has settled at 130.0% of quota
Link below
8
60
75
1
15
25
For the case of TZ, there's been elevated demand for longer-tenor issues (15years and above) due to lack of applicable WHT.
This demand, has in turn pushed yields lower for longer-tenor issues resulting in relatively expensive bond prices (inverse r/ship btn yields and prices)
1
6
22
I may be wrong (I hope I am), but why aren't the other 17 Resilience and Sustainability Fund (RSF) recipient countries not announcing National Tree Planting Days every 6 months?
May as well be Kenya's poor reforms with the main EFF/ECF programme, so holidays are low hanging?
5
18
23
Folks, respectfully stick to your lane
Here
@otienowill
redefines (bond) haircut as "ANY account that is in the bank, you go and chop it off". 😲🫨
GoK's fiscus is not in the best of shapes; but not a license for Wanjiginomics! (Sensationalism)
7
6
23
What about that list we were all waiting from the Former Sports CS?
9
5
23
Another jumbo rate hike will be the market phrase: "To one with the sledgehammer, everything looks like a nail"
Good thing is Oct MPC is coming after Sept inflation print, but based on recent trends, I'd be more worried of negative impact of El Nino to the headline print.
CBK Governor speaking on how last week's pump price review complicates monetary policy. The expectation was that fuel inflation would soften from 14.0% to 10.0% starting Oct, once the base for the wind down of fuel subsidies kicks in. Next MPC is Oct 3rd, another jumbo rate hike?
34
148
273
2
20
24
The ping pong continues!
Budget Committee proposes some amendments to the Bill to be introduced in the Committee Stage this afternoon
@AmbokoJH
you were right! Lets just wait to see what the President will sign
But what caught my eye is that the proposed KES 47.3bn increase in
Having sighted The Supplementary Appropriations (No. 2) Bill 2024, the official spending cut to the national government is KES 99.1bn
Total reduction in net estimates - KES 147.8bn
Total increase in AiA revenue - KES 48.7bn
TOTAL reduction in Gross
0
14
17
4
27
24
FY25 fiscal framework (Initial -vs- Revised).
By the numbers.
[Nominal GDP now at KES 18,054bn from previous assumption of KES 18,015bn]
Explaining the 4 broad adjustments (yellow highlights)
1. KES 146.3bn. Spending cut to the national govt
- Treasury tabled a cut of KES
4
25
23
For a bank, bonds sit on the "Asset" side of its balance sheet. These means that the banks own those bonds.
Customer deposits sit on the "liabilities" side of its balance sheet. These are what the banks owe.
Finance 101.
Don't take us to the rabbit hole your qstn suggests
@ill_dduor
Whose money do banks use to buy the bonds? Some basic ground rules need be agreed before we go further
3
0
1
2
4
24
Those with me up until this point, are familiar with
- coupon payments
- coupon rate
- face value
- fixed coupons
- floating coupons
- principal payments
- bullet maturity
- amortizing redemptions
This is a good starting point, we'll build on these in other parts
(22/n)
1
2
23
Back to my thesis.
GoK is starved of cash.
but Re-openings not making sense.
Floats a new bond (to better reflect current market rates)
..the new bond is non-benchmark which means i). no adverse repricing of equal tenor bonds if yields at primary shoot up ii). better pricing
It is not lost that the 3-year tenor bond is a non-benchmark bond.
Simply means that the bond's yield at no point will be considered in the yield curve. Similar treatment as IFB issues
Let me not read much into this 😅😅😅
5
10
28
2
10
22
Q2: Amortizations of 3 instalments
You borrow 100k from a friend of yours. You can choose to repay it
I. Fully at once (bullet repayment, when it comes to bonds)
or
II. In instalments (amortizations, when it comes to bonds)
GoK has opted to repay the $1.5b in 3 instalments
@MwangoCapital
@ill_dduor
@WehliyeMohamed
@MihrThakar
@raziakkhan
@alykhansatchu
@coldtusker
@DavidNdii
@AginaAby
@Markbohlund
@CharlieTTEcon
@MwangoCapital
could you please explain for laymans like me the first two points:
1) What does pricing 1.5 usd Eurobond at 97% mean? With 10.375% yield
2) Amortization of 3 equal installments
Thanks
1
1
5
2
20
22
At this point, let me get to some basics.
GoK floats T-Bonds on a monthly basis as it seeks to supplement the tax revenue, to fund its expenses.
Treasury bond (or just bonds)? Ideally, the 'bond' ties the borrower, GoK in this case, to pay the lender, investor
(6/n)
1
3
21
For purposes of this discussion, we look at the sovereign (GoK in this case).
On the revenue side, one can think of taxes (as equity) and debt (loans and bonds) as the capital structure of GoK
(3/n)
2
3
22
Latest Privatization & Public Debt report sheds light on this KQ transaction
A new commercial loan entered with EXIM US/PEFCO in lieu of the guaranteed debt servicing obligations to KQ
Mmmh
As per latest QEBR, GoK serviced KES 17.4b to cater KQ debt it guarantees.
-Q123/24 - KES 2.7b
-Q223/24 - KES 4.2b
-Q323/24 - KES 10.5b
Cumulative 9M23/24 - KES 17.4b
YET Supp II removes this line item
I may have missed something while combing Supp II docs...
0
3
5
1
15
21
The '40 (552/20) is one of the 26 benchmark bonds selected for deriving of TZ's yield curve (YC).
TZ received TZS 531.6Bn (USD 229.6Mn) in bids, but sold TZS 139.0Bn (USD 60.0Mn) which was the amount on offer
1
4
20
Sawa Odious Debt Expert 😅
Let us zone in FY24 (July 2023 - June 2024) and give us proof that Kenya took up odious debt. (20mks)
Do that without
- Ad hominem attacks like below
- Googling up (Gen AIs can do better) "odious debt" and tuna bond
List of references
1.
11
4
21
Just to reiterate, if an investor invests KES 100k (face value) in a GoK bond that pays a coupon rate of 10.0% every year, payable every 6months, he/she will receive 5k every 6 months from GoK:
= 10%/2 * KES 100k = KES 5k
NB: Face value, shortly (I promise)
(9/n)
1
2
22
@AmbokoJH
@BrianGeorgeKE
Demystifying the "current $500M..."
Assuming average of official USDKES rate of 113.18, the FY22 (= current FDI) is USD 65.4m (KES 7.4b)
For FY23, the FDI target has been revised down from KES 132b (USD 1.0b) to KES 40b (USD 318m)
What does the CS know, unknown to the SWGs?
1
8
22
This statement really came late in the game. Shows some remorseness on Treasury's part, otherwise the next regime would be shocked at the skeletons they would have bequeathed!
The subsidy was a rabbit hole. Period!
It's not usual Treasury issues a statement on pump prices after EPRA publishes its revision. Treasury says despite Kes 100 bln subsidy (FY21/22 & FY22/23), the subsidy is inefficient in softening prices. In short, tighten your belts further folks it will be a steep climb
16
87
91
1
8
20
@AmbokoJH
Some positive spin to it, probably lowers the refinancing risk that GoK was staring on 9th Jan next year, when the markets generally has thin liquidity after the festive season. Instead of a staggering KES 87.8b migraine, they will have a mild headache of KES 38.7b to deal with
1
7
20
There are two types of payments with bonds.
The first one, is periodic interest payments. Say GoK borrows at a cost of 10.0%, it will be obliged to pay the investor 10% of the investment every year.
But, GoK pays the interest payments twice, every 6months, each at 5.0%
(7/n)
1
2
21
Mmmh....
....but Kenya is not in Southern Africa🤔
Qatar Airways is set to invest in an unidentified airline based in southern Africa in the coming weeks
3
2
5
8
13
21
This month's EPRA review -vs- last month's just confirms that all those 'stabilization' rhetoric from GoK were nothing but 'stories za jaba'! (Non-Kenyans, tall tales)
Why 'stabilize' prices in the first place - as per GoK rhetoric - if you have no clear plan of sustaining it?
Kenya Sep 15th - Oct 14th pump price review:
1. Super goes up by Kes 16.96 to Kes 211.64/litre
2. Diesel goes up by Kes 21.32 to Kes 200.9/litre
3. Kerosene goes up by Kes 33.13 to Kes 202.61/litre
154
594
768
1
17
21
For a start, bonds are issued by governments, corporates and other quasi-government institutions/states as an avenue of raising capital/financing.
For a typical firm, the capital structure is made up of equity (ownership) and debt (obligations, such as loans and bonds)
(2/n)
1
5
19
One pet peeve this FY25 budget has been the inconsistencies with the fiscal figures.
When Division of Revenue Bill (DoRB) 2024 was introduced in early March, it penciled in KES 2,948bn as ordinary revenue. It was assented into law, DoRA, with the same figure of KES 2,948bn on
3
13
20
Kenya's latest Moody's ratings of Caa1 takes it at par with Egypt and Nigeria
But the outlook for Egypt and Nigeria are at "positive" on the ongoing reforms - FX, fiscal - in the two economies
Kenya's "negative" outlook is worrisome
Moody's latest ratings downgrade for Kenya takes it below Tanzania and Uganda on the ratings scale:
🇹🇿Tanzania: B1 (Positive Outlook) in March 2024
🇺🇬Uganda: B3 (Stable Outlook) in May 2024
🇰🇪Kenya: Caa1 (Negative Outlook) in July 2024
16
81
109
1
14
20