Kenya’s government has announced plans to repurchase a KES 116.7 billion tranche of the KES 271.76 billion Eurobond issued in May 2019. This move is part of the government’s strategy to manage its external debt and smoothen its repayment schedule. The buyback will be financed through proceeds from a new bond with a longer repayment period, designed to alleviate debt repayment pressure.
This marks Kenya’s second Eurobond buyback, with the first occurring in February 2014 when the government repurchased KES 191.9 billion of its 2014 Eurobond. That repurchase was financed through the issuance of a new KES 194.5 billion bond. According to the Treasury, bond buybacks help governments retire debt before its maturity, reducing future repayment burdens.
The 2019 Eurobond was issued in two tranches: a seven-year KES 116.7 billion tranche with a 7% interest rate and a 12-year KES 155.6 billion tranche with an 8% interest rate. Under the original structure, the government was expected to repay KES 38.9 billion annually in 2025, 2026, and 2027. However, by refinancing the entire bond through a buyback and new issuance, Kenya will now avoid the May 2025 repayment, easing pressure on its finances amid rising domestic and external debt obligations.
In a statement, the Treasury emphasized the importance of this buyback for managing Kenya’s external debt. “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,” it said.
Regulatory filings reveal that the buyback will target the entire KES 116.45 billion of the seven-year tranche, with the repurchase price set at KES 129,720.46 per KES 129,396.51 bond unit. Additionally, existing bondholders will have priority access to the new Eurobond issuance, allowing them to roll over their investment into a longer-term security.
This buyback is part of a broader strategy to refine Kenya’s debt management, as demonstrated by a similar action taken earlier this year with the 2014 Eurobond.
