The National Treasury of Kenya has successfully priced a USD2.25 billion Eurobond issuance in international capital markets, marking one of the country’s largest external commercial borrowing operations in recent years.
According to the Treasury, the dual-tranche transaction comprises USD900 million notes due in 2034 and USD1.35 billion notes due in 2039, structured to extend Kenya’s external debt maturity profile while providing liquidity for refinancing obligations.
The transaction forms part of the government’s broader strategy to proactively manage public debt liabilities and reduce refinancing risks associated with upcoming Eurobond maturities.
Structure and pricing details
The 2034 tranche was issued at 7.875 percent, with amortisation scheduled in three equal instalments between 2032 and 2034, resulting in a weighted average life of approximately seven years.
Meanwhile, the longer-dated 2039 tranche carries a coupon of 8.700 percent and will amortise between 2037 and 2039, giving it a weighted average life of roughly 12 years.
Treasury officials said the amortising structure is designed to smooth redemption peaks by spreading repayment obligations across several years rather than concentrating them at maturity.
“The issuance aligns with the Government’s strategy to smoothen the maturity profile of Kenya’s external debt and proactively manage public debt liabilities,” the Treasury said in a statement.
Strong investor demand signals market confidence
The offering attracted strong demand from international investors, with the order book significantly exceeding the amount offered, indicating sustained appetite for Kenyan sovereign paper despite global market volatility.
Market participants said oversubscription in frontier market issuances often reflects improving risk perceptions and portfolio diversification demand among global fixed-income investors.
The Treasury attributed the positive reception to recent macroeconomic improvements, including stabilising external balances and strengthening foreign exchange buffers.
Tender offer targets existing Eurobond maturities
Alongside the new issuance, Kenya announced a tender offer aimed at partially buying back outstanding Eurobonds to manage near-term redemption risks.
The government plans to repurchase:
- Up to USD150 million of the 7.250 percent Notes due February 2028
- Up to USD350 million of the 8.000 percent Notes due May 2032
Results of the tender offer are expected to be announced on February 26, 2026.
Debt analysts note that liability management operations combining new issuance and buybacks are commonly used by sovereigns to lengthen maturities, reduce refinancing spikes and optimise borrowing costs.
Proceeds to support refinancing and fiscal operations
According to the Treasury, proceeds from the Eurobond will primarily be used to refinance existing public debt obligations through the buyback programme, with any remaining funds directed toward general budgetary support.
The approach reflects Kenya’s ongoing reliance on external commercial borrowing to complement domestic financing while managing fiscal pressures.
The operation also comes at a time when the government continues to balance debt sustainability objectives with financing requirements for development expenditure and budget deficits.
Credit rating upgrade underpins issuance
The Treasury said the successful pricing follows a recent sovereign rating upgrade by Moody’s Investors Service, which raised Kenya’s rating to B3 from Caa1 and revised the outlook to stable.
The rating action cited reduced default risks, stronger foreign exchange reserves and improvements in Kenya’s current account position.
Credit rating upgrades typically enhance investor confidence and can contribute to improved borrowing terms by lowering perceived credit risk.
Implications for Kenya’s debt strategy
The Eurobond transaction represents a continuation of Kenya’s active liability management strategy, which has increasingly emphasised maturity extension and diversification of financing sources.
Over recent years, Kenya has undertaken multiple debt operations aimed at mitigating refinancing risks associated with its growing stock of external commercial debt.
Analysts say the combination of new issuance and buyback operations helps reduce rollover pressure while maintaining market access, a critical consideration for frontier market sovereign borrowers.
The amortising structure of the new notes may also support medium-term debt sustainability metrics by moderating repayment peaks.
Market and macroeconomic context
Kenya’s return to international capital markets occurs against a backdrop of evolving global financial conditions, including shifting interest rate expectations in advanced economies and changing investor risk appetite for emerging and frontier market assets.
Access to global markets remains an important financing channel for Kenya, particularly as domestic borrowing costs and liquidity conditions fluctuate.
The Eurobond proceeds are also expected to reinforce foreign exchange reserves once disbursed, potentially supporting currency stability and external liquidity buffers.
Government reiterates commitment to prudent borrowing
Treasury officials reaffirmed the government’s commitment to transparent and prudent debt management as part of the broader economic policy framework.
The Eurobond issuance, the Treasury said, remains consistent with the government’s fiscal consolidation and debt sustainability objectives under its economic transformation agenda.
“The Government values the continued partnership with investors and reaffirms its commitment to prudent, transparent, and effective debt management,” the statement said.
Outlook
Market observers will be closely watching the tender offer results and secondary market performance of the newly issued notes to gauge investor sentiment toward Kenya’s sovereign credit trajectory.
The transaction’s success is expected to influence future borrowing plans and may provide a benchmark for subsequent international market operations by the government.
