Kenya has launched a buyback offer for its $900 million (KES116.7 billion) Eurobond due in May 2027, according to a regulatory filing on Monday. The bond is part of a larger $2.1 billion (KES271.76 billion) Eurobond issued in May 2019. 

Proceeds from the buyback will be used to acquire a new bond with a longer maturity, as the government moves to restructure its debt portfolio. A bond buyback is a liability management tool where issuers retire outstanding debt before its maturity date against a cash payment.

“The Republic is making the offer, in conjunction with the offering of the new notes (new Eurobond), as part of the proactive management of Kenya’s external indebtedness, specifically to smooth out the maturity profile of the notes,” Treasury said in the offer statement.

The buyback will be financed by a new issuance of US dollar-denominated notes with pricing anticipated on Thursday, February 27, 2025. The offer, which runs until March 3, will allow investors to sell their notes at US$1,002.50 per US$1,000 in principal amount and is part of a broader strategy to manage Kenya’s external debt and smooth out the maturity profile of its notes.

The buyback targets the 2027 bond, which includes an amortization schedule, with US$300 million due as early as May this year as interest payments are made semi-annually. This is because the 2019 bonds were amortised over their last three years to maturity in equal instalments. Thus, the government was to pay back 

The new offer is expected to conclude with an announcement of results on March 4, 2025, while settlement and accrued interest payments anticipated to be on March 10, 2025, but remains subject to financing conditions and other terms. 

Notably, the total amount of notes to be purchased will be determined at Kenya’s discretion following the pricing of the new notes on February 27, 2025.

Data shows that this transaction will be the Treasury’s second Eurobond buyback and comes just a week after the government hit its target on the first domestic bond buyback, reflecting a strategic approach to managing its debt obligation.

The first Eurobond repurchase took place in February 2024 in which a KES191.9 billion ($1.48 billion) tranche of the $2 billion (KES259.3 bullion) 2014 Eurobond that was just four months to its maturity. 

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