Kenya to Settle Sh129 Billion Eurobond Early, Floats New Issue on London Exchange

A photo collage of President William Ruto and Treasury CS John Mbadi

In a bold move to navigate growing external obligations, President William Ruto’s administration is preparing to make its third Eurobond repayment in just two years, using proceeds from a newly issued bond to fund a strategic buyback.

The decision underscores the government’s evolving strategy to smooth out Kenya’s debt maturity profile amid intensifying fiscal pressure.

The government is currently buying back a $1 billion (Sh129.23 billion) 10-year Eurobond that was issued in 2018 and is set to mature in February 2028.

This repurchase is part of a broader liability management programme that seeks to directly refinance upcoming debt maturities using new bonds with longer durations.

According to an official notification released on the London Stock Exchange on October 2, the buyback offer will remain open until Thursday, October 9.

It is running concurrently with the issuance of new Eurobond tranches that will mature in October 2035 and October 2038, respectively.

The new bonds are being offered in two tranches of seven and twelve years, with investor guidance suggesting interest rates between 8.75 per cent and 9.75 per cent.

These rates are aligned with the secondary market yields of existing Kenyan Eurobonds of similar tenors currently trading on international markets.

While this allows the government to manage its debt profile more proactively, it also means refinancing at a higher cost, given the current global interest rate environment.

This mirrors the approach taken in the previous two buybacks, where newer, more expensive instruments replaced older debt.

The latest buyback follows a similar initiative in February 2024, when Kenya partially refinanced a $2 billion (Sh259 billion) Eurobond issued in 2014.

That bond, which carried an annual interest rate of 6.875 per cent was repurchased through the country’s first sovereign buyback of $1.5 billion (Sh194.3 billion).

At the time, markets had expressed doubts over Kenya’s repayment ability due to a dollar shortage, and the shilling had dropped to an all-time low of nearly Sh161 against the US dollar.

To stabilise market confidence, the Treasury launched a new six-year $1.5 billion bond at 9.75 per cent interest to finance that buyback. The move temporarily eased external liquidity pressure.

Despite these efforts, Kenya’s debt continues to rise. The Central Bank of Kenya reported that the country’s total public debt increased from Sh11.51 trillion in May 2025 to Sh11.81 trillion in June 2025, raising fresh concerns about debt sustainability.

The current strategy reflects a balancing act: avoiding near-term default risks while pushing repayments further into the future.

However, analysts caution that refinancing with higher-interest instruments could deepen Kenya’s long-term debt vulnerability unless accompanied by significant fiscal reforms and stronger revenue performance.