Kenya: Treasury Defers New Eurobond Issue After Easing Debt Pressure
Nairobi — Kenya has shifted its external debt strategy to focus on bond maturities beyond 2030 after successfully easing pressure from near-term commercial debt repayments, the National Treasury has said.
Public debt officials said the government is no longer under immediate pressure to issue a new Eurobond following recent liability management operations that reduced upcoming redemption risks. As a result, refinancing concerns have largely been pushed to 2031 and beyond.
The Treasury has bought back large portions of the 2027 and 2028 Eurobonds, smoothing the country’s near-term redemption profile. Officials said this has reduced the urgency to return to international capital markets, allowing Kenya to wait for more favourable market conditions.
According to the Director General in charge of Public Debt, the government has already retired substantial parts of the $900 million 2027 Eurobond and $652 million of the 2028 bond, leaving remaining obligations at manageable levels.
Future liability management efforts are now expected to target maturities in the 2030s, giving the exchequer greater flexibility in timing any new market issuance without the risk of near-term default.
The strategy shift follows Moody’s Ratings’ decision on January 27, 2026, to upgrade Kenya’s sovereign credit rating to B3 from Caa1, with a stable outlook. The ratings agency cited a significant reduction in near-term default risk and improved external liquidity.
Data from the Central Bank of Kenya (CBK) shows foreign exchange reserves rose to $12.2 billion by the end of 2025, equivalent to 5.3 months of import cover, up from $9.2 billion a year earlier.
Moody’s said improved domestic financing conditions have reduced Kenya’s dependence on external borrowing to fund the budget deficit. However, the agency warned that the country still faces high external debt repayments averaging $2.5 billion to $3.0 billion annually over the rest of the decade.
Despite this, external pressure has eased as Kenya’s current account deficit narrowed to 1.3 per cent of GDP in 2024, supported by strong service exports and remittance inflows.
Moody’s also raised Kenya’s local currency ceiling to Ba3 from B1 and the foreign currency ceiling to B1 from B2, citing lower risks related to capital transfer and convertibility restrictions.
While the International Monetary Fund (IMF) has continued to flag concerns over external imbalances, private sector analysts say Kenya’s improving liquidity position and stabilising macroeconomic outlook could support a tactical Eurobond issuance of about $500 million in the first quarter of 2026, if global market conditions are favourable.
By Capital FM.
