Kenya’s government has secured a KSh194 billion Eurobond loan with a 9.5 percent fixed interest rate, set to be repaid in 2034-2036. It received oversubscriptions of KSh646 billion and aims to use the funds to pay off existing debts, demonstrating strong investor confidence and commitment to prudent debt management within the Bottom-Up Economic Transformation Agenda.
The government of Kenya, through the National Treasury, has announced a new KSh194 billion loan as part of a strategic effort in debt liability management. Treasury Cabinet Secretary John Mbadi revealed on February 27 that this multi-billion shilling loan, issued via Eurobond, carries a fixed interest rate of 9.5 percent, with repayment scheduled in three installments across 2034, 2035, and 2036.
During the announcement, it was highlighted that the loan attracted significant interest, amassing oversubscriptions totaling KSh646 billion from investors. The proceeds from this Eurobond will primarily be allocated to service an existing KSh116 billion Eurobond maturing in 2027. CS Mbadi emphasized that the 2036 Eurobond proceeds would also facilitate the refinancing of external debts, including a planned buyback for a KSh166 billion ($900 million) Eurobond due in 2027.
Mbadi explained that the actual amount designated for the buyback would be contingent on demand during the current Tender Offer, with results anticipated on March 3, 2025. This loan acquisition is in line with the government’s strategy to optimize the maturity structure of Kenya’s external debt, further managing public debt liabilities proactively.
Furthermore, the Cabinet Secretary noted that Kenya’s ability to access international capital markets reflects robust investor confidence in the country’s economic management. He praised the cooperative relationship between the government and investors, emphasizing the shared commitment to prudent public debt management.
“Proactively managing public debt remains a key pillar of the Bottom-Up Economic Transformation Agenda (BETA), spearheaded by President William Ruto. This pricing marks another significant step in advancing that agenda,” CS Mbadi stated. This recent transaction follows the successful early repayment of another Eurobond by President Ruto’s administration in February of the previous year.
The KSh 324 billion Eurobond, which matured in June last year, was initiated during former President Uhuru Kenyatta’s administration. Its buyback was instrumental in strengthening the local currency and boosting investor confidence in Kenya’s monetary policies.
In summary, the Kenyan government has officially announced a new Eurobond issuance as part of its debt management strategy, characterized by an oversubscribed offering and a fixed interest rate. The funds will assist in servicing existing debts and supports the government’s commitment to managing public debt responsibly. This development reflects strong investor confidence in Kenya’s economic management and aligns with ongoing economic transformation efforts.
Original Source: www.kenyans.co.ke
