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Kenya has announced new measures aimed at reducing pressure from its growing public debt. On Wednesday, the government said it plans to buy back up to $500 million of its existing international bonds and replace them with new, longer-term bonds. The move is designed to better manage repayments and give the country more time to settle its obligations.
Finance Minister John Mbadi had earlier indicated that there was room to further smooth out Kenya’s borrowing profile. Last year, the government already went to the international market twice to raise money to repay bonds that were nearing maturity. This latest step continues that strategy by targeting specific bonds and refinancing them before they become a bigger burden.
According to a regulatory notice, the government has launched buy-back offers for two Eurobonds. The first is up to $350 million of the 8% bond due in 2032. The second is up to $150 million of the 7.25% bond that matures in 2028. The amounts offered include accrued interest. The buy-back offer will remain open until February 25.
At the same time, Kenya plans to issue a new dollar-denominated bond split into two parts, or tranches. These new bonds will have a weighted average maturity of seven and 12 years. By issuing bonds with longer repayment periods, the government hopes to spread out its debt obligations over a longer timeline. This reduces the pressure of having to repay large amounts within a short period.
The decision to act early reflects lessons learned from recent financial challenges. In 2024, Kenya faced significant market stress as investors worried about its ability to meet debt repayments. Those concerns led to a downgrade of the country’s credit rating. The downgrade made borrowing more expensive and also put pressure on the Kenyan shilling, which weakened during that period.
Since then, the government has been working to restore investor confidence. By buying back part of its existing debt and replacing it with longer-term bonds, Kenya signals to the market that it is taking a proactive approach to managing its finances. Instead of waiting for bonds to mature and scrambling to repay them, the government is attempting to handle the situation early and in a more controlled way.
Kenya is not alone in taking advantage of improving market conditions. Investor appetite for higher-yielding emerging market debt has strengthened in recent months. Many global investors are looking for better returns and are willing to take on more risk in countries offering attractive interest rates.
Other African countries are also moving quickly to tap into this renewed interest. The Republic of Congo carried out a similar debt buyback earlier this month. Ivory Coast has also entered the market to issue a new 14-year dollar bond. These actions show that several African governments are trying to refinance their debts while market conditions are favorable.
For Kenya, the success of this buyback and new bond issue will depend on strong investor demand. If investors respond positively, it could ease short-term financing pressures and help stabilize the country’s financial outlook. However, long-term debt sustainability will still depend on broader economic growth, fiscal discipline, and effective revenue collection.
Overall, the move represents another step in Kenya’s ongoing efforts to manage its debt more carefully after a challenging period. By refinancing part of its obligations now, the government aims to create more breathing space and reduce the risk of future financial shocks.