Kenya’s latest eurobond issuance has garnered orders exceeding $5 billion, buoyed by expectations of reduced interest rates in the United States, which intensified demand for the high-yield securities.

The East African nation is set to accept $1.5 billion of the seven-year debt at 10.375 percent, marking the highest coupon paid by an African issuer this year, Bloomberg said.

“The country plans to use the proceeds to help finance the repurchase of $2 billion of securities maturing in June. The new bonds will also lengthen the average maturity of Kenya’s outstanding debt,” a source who spoke to Bloomberg and preferred not to be mentioned said.

Kenya faces a cash crunch with approximately $5.2 billion of foreign debt in principal and interest payments due this year, coupled with an additional $2.7 billion due during the next fiscal year.

While the pricing came in below the initial guidance of about 11%, it remains considerably higher than rates observed in other African sovereign issuances this year. Benin issued a 14-year instrument at 8.375 percent, while Ivory Coast secured funds at 8.5 percent.

Gordon Bowers, a London-based analyst at Columbia Threadneedle Investments, when speaking to Bloomberg, remarked,”They decided to pay up to resolve the uncertainty related to this payment, which was putting stress on the currency and domestic interest rates. If this settles the market’s nerves, paying up to access the market could very well be worth it.”

The yield on the eurobonds maturing in June decreased by 66 basis points to 10.68 percent by 9:45 a.m. in London.

Kenya sought market access to avoid tapping into $7.1 billion of foreign exchange reserves to fulfil its refinancing needs. Any depletion of reserves to cover the June maturity could have weakened the economy’s credit metrics.

Strong demand prompted authorities to raise more funds than initially planned, despite the high yield, to safeguard reserves, according to Samir Gadio, head of Africa strategy at Standard Chartered Plc.

Initially targeting $1 billion without raising new funds, Kenya ultimately adjusted its strategy due to overwhelming demand.

“The signalling effect of issuing bonds at such high yields will need to be carefully managed in the medium term,” Gadio cautioned.