Bond Bubble Goes Full-er Retard: 4x Oversubscribed Kenyan Bond Orderbook Is 20% Of Country's GDP
It was just over a year ago when we wrote "Bond Bubble Goes Full Retard", specifically looking at Africa where previously 'Rwanda had issued USD-denominated debt at 7% (lower than Spain yields less than a year ago) just as bond yields of 90% of global sovereign bonds are at or near all time lows. And now, moments ago, we just learned that Ghana (nominal 2013 GDP: $42.8 billion) has just upsized its dollar-denominated $750MM bond issue to $1 billion."
That was then. This is now.
As Deutsche Bank summarizes, an indication of just how off the charts the 2014 edition of the full retard bond bubble is comes from Kenya which priced a debut $2bn eurobond yesterday and in the process managed to break the record for the largest debut for an African country in the sovereign bond market. One tranche of the offering was a $1.5bn 10 year note that priced at a yield of 6.875%.
Kenya is rated B+ and the deal came several days after a large-scale terrorist attack in Kenya.
The punchline: according to the FT, the orderbook was more than four times oversubscribed which is roughly equivalent to around 20% of the country’s GDP according to Bloomberg data.
But don't worry: taking a page out of Europe where GDP has become a meaningless metric, adjusted by such estimates as the size of the prostitution and illegal drug markets, Kenya has gone one step even further.
Nairobi is expected to revise its GDP calculation methodology later this year that may result in the size of Kenya’s economy being revised upwards by 20%.
At which point it will issue even more debt, and even more other people's money will be sunk in a mirage of fundamentals, as GDP has to be revised ever higher to accomodate demand for the African offshot of the global bond bubble.
In short: full retard has just gone full-er retard.
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