Several reasons stack up against a sovereign bond issue by the Kenyan government at this time:

1. The Western world is mired in a Debt Crisis which will cause capital flight from state and municipal bonds of heavily indebted nations in Europe and the U.S.

2. Capital flight will reduce the prices of bonds and inversely result in an upward trajectory of interest rates.

3. Emerging market debt (Kenya would fall under this category) is based upon interest rates of the long end of the U.S. Treasury debt market (10 year and 30 year Treasuries) plus about 200 basis points.

4. Bond investors, fearing default are already shifting their funds into short term U.S. Treasuries causing a rise in long term rates.

5. In the event of default by a sovereign, volatility will spike swaying currencies and bond prices/interest rates. Greece's flirtation with default has caused a spike in its interest rate from 3% to 7.3%.

6. In the event of civil unrest, finger pointing and possibly war, volatility will spike swaying currencies and bond prices/interest rates

Thus, borrow local or better still, cut spending.

"Kenya will issue the delayed sovereign bond in the coming financial year to cut its borrowing from the domestic market and avoid crowding out the private sector.

The Government hopes to rake in Sh14.2 billion from the issue in the 2010/2011 fiscal year which begins in July and Sh15.7 billion the following year.

In its Budget Policy Statement—the country’s medium term economic forecast—now before Parliament’s Budget Committee, Treasury plans to use the bond to boost its rating externally as it tries to find the right financing mix to lift the fragile economy and fix it gaping budget deficit.

Worsening global economic conditions have for two years now frustrated the issue, but Finance minister Uhuru Kenyatta is optimistic time is ripe...."

Read more:

http://www.businessdaily.../-/156jkqr/-/index.html

As a creditor nation and a bucaneer of finance, with impecable timing, China's rise to the summit of global economic is at hand. Martin Armstrong, former Chairman of Princeton Economics International Ltd., postulates that China could overtake the U.S. as the leading economic power between 2015 - 2020 as the latter grapples with a Debt Crisis. History rhymes as the U.S. overtook Britain during the Currency Crisis of 1931.

China and Africa, a match made in heaven.

"The increasingly fierce competition between Japan and China over natural resources, markets for their corporate firms and political influence intensified on Tuesday as China extended a Sh7.5 billion loan for power generation.

This came barely two weeks after Japan advanced Kenya’s power sector Sh23.4 billion in what is emerging as a race between the two Asian giants to increase their presence in Kenya.

It is also seen as part of the wider plan to exert its influence in Africa— especially on the diplomatic and economic front at the global stage...."

Read more:

http://www.businessdaily.../-/l890a4z/-/index.html

Achtung! Exercise caution.

"A near doubling of house and apartment prices in the last three years has been accompanied by close to zero growth in rents, leading to what may be a permanent fall in rental yields for landlords, a new property pricing survey indicates.

HassConsult, the estate agency that runs a residential property index, said an upturn in the supply of rental property during the economic slowdown of the last two years has pulled back price movement and warned buyers to start adjusting their expectations on the likely returns from property investments.

After providing for inflation in the past three years, real rental incomes fell over the period, says the survey....."

Read more:

http://www.businessdaily...0/-/4dhnqz/-/index.html

Keep your eye on the rise of the Tea Party in the United States as a response to the financial crisis.

"The Tea Party movement is a populist[1] United States protest movement that promotes fiscal conservatism.[2] The movement emerged in 2009 through an ongoing series of Tea Party protests.[3][4][5][6] These are partially in response to the 2009 stimulus package[7][8] as well as the 2008 bailouts.[9] In 2010 The Economist described the movement as "America's most vibrant political force."[10]" - Wikipedia

"Economic indicators in these metros have gone from bad to worse, with no sign of recovery.

Miami boasts a popular South Beach club scene, Art Deco Architecture, and perhaps the best Cuban food in the country. But residents don't have much else to celebrate.

More than three years after the economy started its downward slide, the Miami metro area, like a handful of Sun Belt cities, still hasn't begun to recover. Median home prices in Miami have fallen 38% since its market peaked in the second quarter of 2007; the city's 11% unemployment rate is above the national average and has grown more than most of the 40 cities we surveyed....."

Read more:

http://realestate.yahoo..../us-cities-in-free-fall

More meat on the Goldman Gambit.

"Can it get any worse?

Every time you pick up another rock along the winding path that led to the financial crisis, something else crawls out. Subprime mortgages were sold as a way to give low-income people a chance at homeownership and the American Dream. Instead, the mortgages turned out to be an excuse for predatory lending and fraud, enriching the lenders and Wall Street at the expense of subprime borrowers, many of whom ended up in foreclosure.

The ratings agencies, which rated the complex investments that were built with subprime mortgages, turned out to be only too happy to be gamed by firms that paid their fees — slapping AAA ratings on mortgage bonds doomed to fail. Lehman Brothers turned out to be disguising the full reality of its horrid balance sheet by playing accounting games. All over Wall Street, firms pushed mortgage originators to churn out more loans that were doomed the moment they were made...."

Read more:

http://www.nytimes.com/2...usln&pagewanted=all

kk. Now that you're talking about sovereign debt and bond investors...found a juicy tit-bit. Remember a while ago i asked you what foreign liabilities in the CBK balance sheet meant? Post 278. I found out an interesting answer.

CBK purchased USD38 million worth of USD Bonds investments under the World Bank RAMP. It joined RAMP in March 2009. The reason why it appears on the balance sheet is cos of a change in accounting treatment for the transaction from the settlement accounting method to a trade date accounting method.

According to the World Bank website RAMP clients span central banks, sovereign wealth funds, national pension funds and supranational organizations. As of year-end 2008, Treasury was working with 35 clients of which 80% were central banks.

There are some interesting links below for you to read.

http://treasury.worldbank.org/sip/htm/index.html
http://treasury.worldban...p/htm/central_bank.html
http://treasury.worldban...ank_Bond_Issuances.html
http://www.investopedia....tradedateaccounting.asp
http://www.investopedia....ementdateaccounting.asp

Though I'd be interested in what else is in CBK's bond portfolio? And the coupon?

you remind me of a man who used to walk around the local market haggling prices. with himself.

they soon carted him off

To the brink and back.

"(Reuters) - Finance leaders scrambled to secure aid for debt-stricken Greece on Saturday and Canada cautioned that some European countries feared the 45 billion euros ($60 billion) under consideration was not enough.

Greece

Talks over Greece dominated annual International Monetary Fund and World Bank meetings, a day after Athens bowed to market pressure and asked to tap a rescue package from the European Union and the IMF.

"Some countries think it's not enough," Canadian Finance Minister Jim Flaherty told reporters when asked about the amount of aid being negotiated..."

Read more:

http://www.reuters.com/a...e/idUSTRE63N18020100424

As a creditor nation and a bucaneer of finance, with impecable timing, China's rise to the summit of global economic is at hand. Martin Armstrong, former Chairman of Princeton Economics International Ltd., postulates that China could overtake the U.S. as the leading economic power between 2015 - 2020 as the latter grapples with a Debt Crisis. History rhymes as the U.S. overtook Britain during the Currency Crisis of 1931.

"The World Bank recognized China's growing economic influence and agreed Sunday to elevate Beijing's voting power to behind only the U.S. and Japan in the 186-nation lending organization.

Lifting China above a number of Western powers, including Germany, France and Britain, also gives other nations with emerging economies more voice and say in how the bank operates and lends money...."

Read more:

http://www.businessweek....ncialnews/D9FAG2N00.htm