Kenya has partially retired $415.35 million of its Eurobonds, falling short of its initial target of $500 million. The buyback included $324.842 million from a bond maturing in 2032 and the full $90.51 million tendered for the 2028 bond. While investors tendered notes worth $892.12 million for the 2032 bond and $90.51 million for the 2028 bond, Kenya accepted a lower total amount.
The government offered a premium on the face value for the buyback: 5.5 percent for the 2032 bond and 3.5 percent for the 2028 bond. Specifically, it paid a fixed price of $1,055 per $1,000 principal unit for the 12-year paper and $1,035 for the 10-year bond. This effort is aimed at lengthening the maturity profile of Kenya's public debt to ease repayment pressures.
The buyback was funded by a new $2.25 billion Eurobond issued on February 20. This new issuance comprised two tranches: a $900 million seven-year paper with an annual interest rate of 7.875 percent, and a $1.35 billion 12-year paper with a coupon of 8.7 percent. The proceeds from this new Eurobond are also intended to cover external budget financing for the 2025/2026 fiscal year, leaving a balance of $1.83 billion after the buyback.
Despite this move, the World Bank had cautioned African states against using new Eurobonds to refinance maturing ones, warning that such higher-cost borrowing could exacerbate default risks and undermine economic stability. However, Kenya's National Treasury Principal Secretary Chris Koo stated that the latest issue was motivated by improved market conditions, allowing countries to proactively manage public debt liabilities.
