NAIROBI: Kenya's shilling strengthened on Tuesday, helped in part by expectations of hard currency inflows from offshore investors in a 12-year government infrastructure bond worth 20 billion shillings ($224.22 million).
By 0805 GMT, the shilling was trading at 89.20/30 to the dollar, compared with Monday's close of 89.35/45.
The bank said the bond will have an 11 percent coupon, and bids will be received up to Nov. 20, or until the amount is allocated to bids once they are submitted. The proceeds will partly be used to fund expansion of Kenya's main airport.
The first 15 billion shilling tranche of the bond was oversubscribed at auction on Oct. 22 and paid a weighted average yield of 11.263 percent from 12.363 percent when it was last sold in October last year.
"That attracted quite a bit of offshore interest," said one trader at a commercial bank, referring to the first bond offering. He said expectations of further buyers from abroad for the extended bond offer was helping the shilling.
He said the shilling was likely to continue trading in a range of 88.80 to 89.50 at least for the next few days.
The central bank supported the currency by selling dollars last month when the shilling reach the 89.50 mark.
Overall, the shilling has been under pressure for much of the year, largely because of a sharp drop in tourist arrivals, a major source of hard currency, because of a spate of Islamist attacks on the coast and elsewhere.-Reuters
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