The current administration has signalled its return to the international capital markets with the launch of a new dual-tranche US Dollar Eurobond, setting the stage for a significant liability management exercise.
It has announced preliminary pricing, or initial price thoughts (IPTs) for two new bonds that include a 7-year bond due in 2034 with an interest rate around 8.375%, and a 12-year bond due in 2039 with a rate in the 9.25% range.
The proceeds from this transaction are primarily earmarked for the capped Sh64.42 billion ($500 million) buyback of existing bonds notes due in 2028 as well as those maturing in 2032.
This concurrent tender offer allows the government to address near-term repayment pressures while signalling confidence to the market. Any funds remaining after the liability management exercise are expected to be directed toward general budgetary support, providing the treasury with additional fiscal flexibility.
The transaction is being orchestrated by Citigroup Global Markets Limited and The Standard Bank of South Africa Limited, who are serving as joint book-runners. Their involvement ensures continuity, as the same institutions are steering the concurrent liability management operation, underscoring a coordinated approach to the country’s debt strategy.
The new notes themselves are structured as senior unsecured instruments under 144A/Reg S regulations, making them accessible to institutional investors in the United States and internationally. They carry an expected rating of ‘B’ from both S&P and Fitch, aligning with Kenya’s sovereign credit profile.
With a minimum denomination set at a substantial Sh25.77 million ($200,000), the issuance is clearly targeted at institutional players and accredited investors. Interest on the bonds will be paid semi-annually on a 30/360 day-count basis, with settlement anticipated for 26 February 2026.
With this move the government is taking deliberate steps to flatten its redemption schedule and mitigate the rollover concentration risk that has loomed over the 2026 to 2032 window. This proactive approach to liability management reflects a trend among emerging market sovereigns seeking to pre-empt liquidity crunches by smoothing out debt maturities.
The launch also serves as a barometer for investor sentiment toward African credit in a global environment characterised by shifting interest rate expectations and persistent risk aversion.
The ability to price these new instruments at the indicated levels will provide valuable insight into the market’s appetite for the nation’s paper and its confidence in the country’s fiscal trajectory. It is clear the government aims to manage upcoming debt maturities and smooth its redemption profile.
