By Racheal Nagawa | Senior Reporter, Business Express
Kenya has launched a liability management operation aimed at retiring up to US$500 million (approximately KSh 64.5 billion) of its outstanding Eurobonds, signaling a proactive approach to managing its external debt ahead of a planned fresh US dollar bond issuance.
According to regulatory filings published on the London Stock Exchange, the government is targeting two international notes: the 7.25% Eurobond due in 2028 and the 8.00% amortising notes maturing in 2032. The buyback offer is structured at premium prices, reflecting an effort to smooth Kenya’s medium-term debt profile and ease refinancing pressure.
Managing the 2028 Maturity Wall
Kenya’s next major sovereign maturity falls in February 2028—a timeline that has loomed large in investor discussions. With global interest rates remaining elevated and emerging market borrowing conditions still volatile, the Treasury is seeking to reduce near-term amortization risks while preserving market access.
Under the terms of the offer, Kenya will purchase up to US$150 million of the 2028 notes and up to US$350 million of the 2032 notes. For accepted bonds, the government will pay US$1,035 per US$1,000 of principal for the 2028 paper (103.50% of face value) and US$1,055 per US$1,000 for the 2032 notes (105.50%), in addition to accrued interest.
The targeted bonds total approximately US$1.6 billion in outstanding principal, meaning the buyback will address only a portion of the eligible stock. If tenders exceed the stated caps, allocations will be made on a pro-rata basis.
Officials have framed the transaction as a prudent debt management exercise designed to reduce commercial external obligations and improve Kenya’s maturity ladder. All bonds accepted in the tender will be cancelled and permanently retired.
Linked to Fresh Dollar Bond Issuance
Crucially, the buyback is conditional upon the successful placement of a new US dollar bond—or alternative acceptable financing. This dual-track approach, pairing fresh issuance with partial retirement of existing debt, mirrors previous operations undertaken by Kenya to navigate refinancing constraints.
Investors who participate in the tender will receive priority consideration in allocations for the forthcoming bond issue, though final allotments remain at the government’s discretion.
Market participants suggest that Kenyan Eurobond yields have recently tightened amid improved investor sentiment and narrowing credit spreads. A recent rating action and stronger foreign exchange reserve metrics have supported secondary-market performance, with the 2032 notes trading below coupon levels—an indication that the sovereign may secure new funding at comparatively competitive pricing, albeit still above investment-grade benchmarks.
Fiscal Pressures and Market Confidence
Kenya continues to operate within a constrained fiscal environment marked by elevated debt servicing costs and a growing commercial debt component. The success of the buyback and associated issuance will serve as a litmus test for investor confidence in the country’s macroeconomic stabilization efforts.
Participation in the tender is limited to institutional investors, with a minimum submission size of US$200,000. The offer closes on February 25, 2026, at 5:00 p.m. New York time, with results expected the following day and settlement targeted for March 3.
By retiring a portion of higher-cost debt while potentially issuing new paper under improved market conditions, Kenya aims to rebalance its external obligations and reduce refinancing bottlenecks ahead of the 2028 maturity peak.
For policymakers, the operation reflects a broader shift toward active liability management rather than reactive refinancing—an approach that will likely define Kenya’s sovereign debt strategy in the coming years.
About the Author
Racheal Nagawa is the Senior Reporter at Business Express Magazine, specializing in sovereign debt markets, macroeconomic policy, public finance, and capital markets analysis. She provides in-depth coverage of the financial strategies shaping East Africa’s economic future.
