Kenya has completed a US$2.25Bn (KSh 290.3Bn) Eurobond to refinance near-term maturities, replacing 2028 and 2032 debt with longer-dated amortising bonds in a move Treasury linked to improving investor confidence following a recent sovereign rating upgrade.
- •The government said on February 20 that it successfully priced a dual-tranche transaction comprising US$900Mn (KSh 116.1Bn) of 7.875% notes due 2034 and US$1.35Bn (KSh 174.2Bn) of 8.700% notes due 2039.
- •Both tranches amortise in three equal instalments, extending Kenya’s external debt profile while avoiding large single bullet repayments.
- •Treasury framed the transaction as part of a broader strategy to smooth Kenya’s external debt maturity profile and reduce refinancing pressure.
Treasury said demand significantly exceeded the amount on offer, allowing Kenya to return to international markets after a period of constrained access for frontier sovereigns. The issuance follows an improvement in market conditions for African borrowers and comes weeks after Moody’s upgraded Kenya’s sovereign rating to B3 from Caa1, citing lower near-term default risk, stronger foreign-exchange reserves and a narrower current account deficit.
Proceeds from the bond sale will be used to refinance existing public debt obligations, including a previously announced tender offer to buy back up to US$150M (KSh 19.4B) of the outstanding 7.25% notes due February 2028 and up to US$350M (KSh 45.2B) of the 8.00% amortising notes due May 2032, in both cases inclusive of accrued interest. Any remaining proceeds will be directed toward general budgetary support.
The 2034 notes amortise in 2032, 2033 and 2034, giving a weighted average life of seven years, while the 2039 notes amortise in 2037, 2038 and 2039, with a weighted average life of 12 years.
The buyback plan was first disclosed in a tender announcement published via the London Stock Exchange on February 18. Under the offer terms, Kenya is paying US$1,035 per US$1,000 of principal for the 2028 notes and US$1,055 per US$1,000 for the 2032 notes, plus accrued interest. The tender closes on February 25 at 5:00pm New York time, with results scheduled for February 26 and settlement expected on March 3. All repurchased notes will be cancelled and permanently retired.
By retiring near-dated obligations and replacing them with longer amortising instruments extending to 2034 and 2039, the government is seeking to lower rollover risk.
