Kenya is returning to the international markets with a plan to borrow Ksh.193.5 billion ($1.5 billion) through a new bond while simultaneously repurchasing up to Ksh.116.1 billion ($900 million) of existing debt, the National Treasury announced.
It is a strategy by the National Treasury designed to ease short-term repayment pressures and stretch the country’s debt obligations further into the future.
The new bond, maturing in 2036, carries a 9.5% interest rate as Kenya targets older bonds due in 2027 with a 7% interest rate for its buyback program.
Investors holding the 2027 bonds can sell them back to the government at Ksh.129,322.50 ($1,002.50) per Ksh129,000 ($1,000) face value—a small profit incentive.
The buyback offer remains flexible, allowing the government to adjust the amount redeemed based on financial needs.
What it Means
This dual approach reduces Kenya’s repayment burden in 2027 while extending it to 2036 with the new bond.
Also Read: What It Means After Kenya Failed to Honour Promised $300 Million Buyback
However, the higher interest rate on the 2036 bond means taxpayers will shoulder increased costs over time. Investors now face a choice: cash out now with the buyback or hold their 2027 bonds for full repayment with continued 7% interest.
Treasury Slashes Revenue Forecasts After Overly Optimistic Projections
In a candid address on Thursday, Treasury Cabinet Secretary John Mbadi admitted the government has been “living a lie” by overestimating revenue.
Initially projecting Ksh2.6 trillion in ordinary revenue for the 2024-2025 financial year, the figure has been cut to Ksh2.5 trillion due to underperforming collections. Looking ahead, the 2025-2026 budget has also been revised downward by Ksh183 billion.
“We are now more realistic,” Mbadi said, signaling a shift toward conservative financial planning.
The adjustments come as Kenya grapples with balancing ambitious budgets against economic realities, even as it takes on fresh debt to manage existing liabilities.
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