Kenya is set to repurchase a $900 million (Ksh.116.7 billion) tranche of its $2.1 billion (Ksh.271.76 billion) Eurobond issued in May 2019. This strategic move aims to ease debt repayment pressure by refinancing the bond with proceeds from a new issuance that offers a longer repayment period.
Government’s Second Eurobond Buyback
This marks Kenya’s second Eurobond buyback, following the first in February 2024, when the government repurchased $1.48 billion (Ksh.191.9 billion) of the 2014 Eurobond, just four months before its maturity. That buyback was funded through a new seven-year bond worth $1.5 billion (Ksh.194.5 billion).
Bond buybacks allow governments to retire outstanding debt before maturity, reducing future repayment burdens and stabilizing the economy.
Breakdown of the 2019 Eurobond
Kenya’s 2019 Eurobond was issued in two parts:
- A seven-year $900 million tranche (Ksh.116.7 billion) at an interest rate of 7%
- A 12-year $1.2 billion tranche (Ksh.155.6 billion) at an interest rate of 8%
These bonds were structured for amortized repayments, requiring the government to pay $300 million (Ksh.38.9 billion) annually in 2025, 2026, and 2027. The first installment was due in May 2024.
Treasury’s Plan to Manage External Debt
Announcing the buyback, the National Treasury emphasized its commitment to proactive debt management.
“The Republic is making the offer, in conjunction with the offering of the new notes (new Eurobond), as part of the proactive management of Kenya’s external indebtedness, specifically to smooth out the maturity profile of the notes,” the Treasury stated.
By executing this $900 million buyback, Kenya will avoid the scheduled May 2024 repayment, easing financial strain amid rising domestic and external debt obligations.
Buyback Pricing & Investor Incentives
Regulatory filings show that the buyback will target the entire outstanding $900 million (Ksh.116.45 billion) of the seven-year tranche. The repurchase price is set at $1,002.50 per $1,000 bond unit—offering an attractive incentive to bondholders.
Additionally, existing 2019 bondholders will receive priority access to the new Eurobond issuance, allowing them to roll over their investments into a longer-term security.
“When considering allocations of any new notes (the new Eurobond), the Republic intends to give preference to those noteholders who, before such allocation, have tendered, or indicated their firm intention to tender, the notes (the 2019 Eurobond),” the Treasury confirmed.
Kenya’s Eurobond Strategy & Debt Management
This buyback follows Kenya’s latest $1.5 billion (Ksh.194.09 billion) Eurobond issuance in February 2024, which was used to repurchase a portion of the 2014 bond.
By strategically managing its external debt through buybacks and refinancing, the government aims to smooth its repayment schedule, reduce financial risks, and ease pressure on public finances.
As Kenya continues navigating its debt obligations, the latest Eurobond strategy signals a commitment to fiscal discipline, investor confidence, and long-term economic stability.
