East African Breweries Limited (EABL) is set to redeem its KES 11.0 bn corporate bond earlier than originally planned in a strategic move to reduce its financing costs and strengthen its financial position. The bond, issued in October 2021 with a fixed interest rate of 12.3%, was due to mature in October 2026 but will now be repaid on October 29, 2025. This early redemption means EABL will pay back bondholders the principal amount plus accrued interest up to the redemption date, effectively closing out this bond issue a year ahead of schedule.
Refinancing through early bond redemption is a financial strategy companies use to manage debt more efficiently. By repaying existing debt before maturity and potentially replacing it with new, cheaper debt, firms can save money on interest payments. In EABL’s case, interest rates in the market have dropped significantly since 2021, making it favorable to refinance at a lower cost than the original 12.3% coupon payments. This translates into lower annual interest expenses and improved profitability.
The initial bond issuance in 2021 was hugely successful, being oversubscribed by 275.0%, and the funds raised were utilized to refinance short-term debts and support working capital. Over time, EABL has been focused on reducing overall borrowings. According to their 2025 annual integrated report, borrowing declined by 15.9% to KES 34.8 bn in 2025 from KES 41.4 bn in 2024, reflecting improved financial discipline and operational strength.
By redeeming the bond early, EABL also avoids having the bond classified as a short-term liability in its financial statements, presenting a healthier balance sheet to investors and creditors. Furthermore, this move sends a positive signal about the company’s liquidity position and ability to manage its debt obligations proactively despite economic challenges such as inflation and currency volatility.
EABL’s strategy involves using internally generated cashflows or short-term financing to buy back the bond, alongside plans to possibly issue new bonds at more attractive interest rates, thanks to better market conditions. This refinancing effort not only cuts finance costs but also provides financial flexibility for the company to invest in its core business and maintain its competitive edge in the East African market.
EABL’s early redemption and refinancing of its KES 11.0 bn bond demonstrates prudent financial management aimed at reducing debt servicing costs, enhancing its balance sheet, and positioning the company for sustainable growth. It reflects strong investor confidence and strategic use of capital markets to optimize corporate finances in a changing economic environment.
