Kenya is planning to issue new dollar-denominated Eurobonds to buy back $900 million of its existing Eurobonds maturing in 2027. This move is part of the country's strategy to proactively manage its external debt and smooth out its debt maturity profile, according to a Government statement. The government did not specify the amount it intends to raise through the new bonds or their maturity period, reserving the right to adjust the tender amount as needed.
Kenya has been restructuring its debt since last year when its finances came under significant pressure as the maturity date for a $2 billion Eurobond bullet payment approached. The country successfully refinanced part of this debt, extending its maturity to 2031, albeit at a relatively high cost. The next major debt maturity after this swap is a $1 billion payment due in 2028.
The buyback offer for the 2027 Eurobonds is priced at $1,002.50 per $1,000 of principal. Citigroup Global Markets Ltd. and Standard Bank of South Africa Ltd. are managing the transaction. The 2027 notes, issued in 2019 with a 7% coupon, saw their yield increase by 78 basis points by late afternoon in London.
Kenya's debt situation remains precarious, with the International Monetary Fund (IMF) classifying it as being at high risk of distress. The country's debt stands at 63% of its gross domestic product (GDP) in present value terms. In addition to heavy debt repayments, Kenya's public finances are strained by growing arrears owed to contractors and suppliers.
This debt management effort comes amid other financial developments, including a $1.5 billion loan from the UAE expected next week and a recent currency gain that helped reduce Kenya's debt for the first time in two decades.
