Kenya plans to repurchase a $900 million (Ksh.116.7 billion) seven-year tranche of the $2.1 billion (Ksh.271.76 billion) Eurobond issued in May 2019.
The government intends to finance this buyback using proceeds from a new bond with a longer repayment period, aiming to ease debt repayment pressure.
This will be the Treasury’s second Eurobond buyback. The first occurred in February 2014, when the government repurchased $1.48 billion (Ksh.191.9 billion) of the $2 billion (Ksh.259.3 billion) 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 help governments retire outstanding debt before maturity, reducing future repayment burdens.
Kenya’s 2019 Eurobond was issued in two tranches: a seven-year $900 million (Ksh.116.7 billion) tranche and a 12-year $1.2 billion (Ksh.155.6 billion) tranche. These carried interest rates of seven percent and eight percent, respectively.
Treasury’s Plan to Smooth Debt Repayments
Announcing the buyback, the Treasury stated: “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 2019 bonds were structured for amortized repayments over the final three years, reducing lump-sum payments at maturity. Under this plan, the government was set to repay $300 million (Ksh.38.9 billion) annually in 2025, 2026, and 2027. The first installment was due in May this year.
By refinancing the entire bond through a buyback and new issuance, the Treasury will now avoid the May repayment, providing relief amid rising domestic and external debt obligations.
Buyback Details & Investor Incentives
Regulatory filings reveal that the buyback will target the entire outstanding $900 million (Ksh.116.45 billion) of the seven-year tranche. The government has set the repurchase price at $1,002.50 (Ksh.129,720.46) per $1,000 (Ksh.129,396.51) bond unit.
Existing holders of the 2019 bond will also have priority access to the new Eurobond issuance, allowing them to roll over their investment 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 to the Republic or a dealer manager their firm intention to tender, the notes (the 2019 Eurobond),” the Treasury stated.
The latest issuance, Kenya’s fifth Eurobond, raised $1.5 billion (Ksh.194.09 billion) in February 2024. The government used these funds to buy back a portion of the 2014 bond.
By strategically managing its external debt through buybacks and refinancing, the government aims to smooth its repayment schedule and ease pressure on public finances.
