hisah wrote:hisah wrote:murchr wrote:What is the expected impact of the shilling downgrade? Strong $$
Eurobond 2.0 out the window. Premium rates will be demanded by the bond market.
Capital flight into the USD is a global trend that KE can't escape.
Which way, austerity to cut gok recurrent budget or print to stimulate the slumping private sector? Election looms so the latter is likely. Inflation will chew KES 'strength'. BNP Paribas warns Kenya risks foreign debt default
@murchr this is what I meant with the looming strong USD expected post BREXIT. Nobody is planning for supersized USD strength as the wheels come off in euroland. Confidence is a very expensive commodity. Sovereign debt fallout is real and will be chaotic as the USD inflates! I don't like where this is headed nor what is inevitably coming our way. We managed to double our total debt in under 4 years. If we are already on an exponential debt growth pattern then this could get ugly pretty fast.
Combining our seemingly insatiable appetite for debt, an increasingly larger interest component as a % of debt repayments, premium borrowing rates and a KES devaluation is a disaster in the making. Using an exponential doubling time as the base case,we might be looking at a debt burden of 7trillion (bigger than our GDP) as early as 2018. The guys at BNP Paribas are overly generous by stating a default is five years away if the situation isn't rectified pronto.
The euro bond appears to have aborted which could mean our debt mix will get worse in the course of this year as the govt undertakes patchwork borrowing antics. T-bills/bonds yield spike is a certainty before the year is out.
That said, has Treasury repaid the overdraft for the last financial year? Cbk and the mandarins at treasury are still at loggerheads in an austerity vs expansionist fight. Turning on the spigots needs the Cbk to be agreeable to the whims of the executive...I am not sure that is the case now. At some point one of them will have to drop their stance.
The main purpose of the stock market is to make fools of as many people as possible.