Kenya has launched a buyback offer for its US$900 million Eurobond due in May 2027, as revealed in a regulatory filing on Monday.
- •The buyback will be financed by a new issuance of US dollar-denominated notes with pricing anticipated around February 27, 2025.
- •The offer, which runs until March 3, will allow investors to sell their notes at US$1,002.50 per US$1,000 in principal amount.
- •The offer is part of a broader strategy to manage Kenya’s external debt and smooth out the maturity profile of its notes.
“The Republic is making the Offer, in conjunction with the offering of the New Notes, as part of the proactive management of Kenya’s external indebtedness, specifically to smooth out the maturity profile of the Notes,” Treasury said in the offer statement.
A bond buyback is a liability management tool where issuers retire outstanding debt before its maturity date against a cash payment.
The buyback targets the 2027 bond, which includes an amortization schedule, with US$300 million due as early as May this year as interest payments are made semi-annually. This comes just a week after the government hit its target on the first domestic bond buyback, reflecting a strategic approach to managing its debt obligation.
In February 2024, Kenya reduced its chances of defaulting on the $2 billion debt, easing investors’ jitters about the settlement of the Eurobond with some projecting liquidity and debt crisis. After the US$1.5 billion partial buyback in the same month, the shilling turned bullish, mirroring restored market confidence.
The new offer is expected to conclude with an announcement of results on March 4, 2025, with settlement and accrued interest payments anticipated on March 10, 2025, subject to financing conditions and other terms.
The total amount of notes to be purchased will be determined at Kenya’s discretion following the pricing of the new notes on February 27, 2025.
