Kenya is considering buying back as much as $500 million of its outstanding Eurobonds as part of a broader strategy to smooth debt repayments, reduce refinancing risks and take advantage of improving investor appetite for African sovereign debt, according to Bloomberg.
Under the proposal, East Africa’s largest economy would repurchase part of its outstanding international bonds during the 2026/27 fiscal year while simultaneously issuing a new US dollar-denominated bond to finance the transaction. The final amount repurchased will depend on investor demand, with any excess proceeds expected to be used for budget financing.
If completed, the transaction would mark Kenya’s fourth external debt buyback in two years, according to Nairobi-based financial services firm Mwango Capital, highlighting the government’s increasingly active approach to managing its external debt obligations.
The proposed transaction would involve repurchasing outstanding Eurobonds while issuing new dollar-denominated debt to extend maturities and reduce near-term refinancing pressure, a strategy that has become more attractive as borrowing costs ease and investor appetite for African sovereign debt improves.
The move also reflects a broader trend among African sovereigns seeking to actively manage their debt portfolios. Angola announced plans in May to repurchase Eurobonds maturing in 2028 and 2029, while the Republic of Congo earlier bought back part of the bonds it issued in November at what was then the world’s highest sovereign borrowing cost.
A final decision on Kenya’s transaction has not been made, and the plans could still change, according to the people familiar with the discussions.
The buyback comes as President William Ruto’s administration seeks to strengthen public finances following two years of mounting fiscal pressures. The country continues to spend more on servicing public debt than on health and education combined, according to government budget documents, while the International Monetary Fund classifies the country as being at high risk of debt distress.
The government’s fiscal position deteriorated after nationwide protests in 2024 forced Ruto to withdraw tax measures worth an estimated $2.7 billion, limiting revenue growth at a time of rising debt obligations.
Since then, authorities have pursued a series of liability management measures to reduce debt-servicing costs and smooth future repayments. Last year, Kenya restructured part of its debt owed to China’s Export-Import Bank by converting a portion of its Standard Gauge Railway loan into yuan, a move expected to reduce exchange-rate costs and ease pressure on the country’s dollar reserves.
As of the end of March, the country’s external public debt stood at $43.7 billion, according to Treasury data. The World Bank accounted for the largest share at $15.3 billion, followed by $10.6 billion owed to Eurobond investors and $4.69 billion to China, underscoring the government’s growing focus on actively managing its external debt portfolio as global financing conditions improve.
