Kenya’s $500 million (Sh64.5 billion) Eurobond buyback has fallen short of target by Sh10.92 billion as the government chose to make a smaller early redemption of the debt despite investors tendering nearly double the amount the State initially sought to repurchase in the offer.
The buyback targeted $350 million (Sh45.2 billion) on a 12-year bond maturing in 2032, and $150 million (Sh19.4 billion) on a 10-year bond that falls due in 2028. The total redemptions however came in at $415.35 million (Sh53.5 billion).
A notice from the London Stock Exchange (LSE), where the two papers are listed, said that bondholders tendered notes worth $892.12 million (Sh115.1 billion) on the 12-year bond, and $90.51 million (Sh11.68 billion) on the 10-year bond.
The tender was priced at a fixed price of $1,055 per principal bond unit of $1,000 for the 12-year paper, and $1,035 for the 10-year bond, representing premiums of 5.5 percent and 3.5 percent on the face value of the bonds.
“The Republic has accepted 2032 notes for purchase subject to proration, with the final proration factor being 0.329471 and the aggregate principal amount of the 2032 notes accepted for purchase being $324.842 million. The 2028 notes validly tendered were accepted for purchase by the Republic in full,” read the LSE notice in part.
Bondholders will also be paid accrued interest on their holdings, which is the amount of interest that they have earned since their most recent semi-annual interest payments in August and November 2025.
Besides the price premium, a buyback hands bondholders their principal investment early, giving them an opportunity to reinvest the funds in other assets that may be offering higher returns.
The 2028 paper will now carry an outstanding principal of $281 million (Sh36.3 billion), down from $371.56 million (Sh47.94 billion) before the buyback.
The 2032 paper’s outstanding principal drops to $875.16 million (Sh112.9 billion), from $1.2 billion (Sh154.8 billion). The 2028 and 2032 bonds pay annual interest at 7.25 percent and eight percent respectively.
The Treasury is funding the transaction using proceeds of a new Eurobond that was issued on February 20, which raised a gross amount of $2.25 billion (Sh290.3 billion).
After accounting for the buyback, the government will have a balance of $1.83 billion (Sh236.7 billion), which will go towards the external budget financing component of the 2025/2026 fiscal year.
This is the fourth Eurobond buyback by the government in the last two years, part of a wider refinancing plan aimed at lengthening the maturity profile of Kenya’s public debt to ease repayment pressure.
Calm the markets
In February 2024, the Treasury undertook its first sovereign buyback of $1.5 billion (Sh193.5 billion) to partially refinance the $2 billion (Sh258 billion), 10-year tranche from 2014, which paid interest at 6.875 percent per annum.
This exercise was also meant to calm the markets which had become doubtful of the government’s ability to retire the debt amid a dollar shortage at the time. To fund this debut buyback, the Treasury floated a new six-year, $1.5 billion paper at a rate of 9.75 percent —which matures in February 2031.
In March 2025, the Treasury carried out a partial buyback of $579 million (Sh74.7 billion) on a $900 million (Sh116.1 billion), seven-year bond that had a seven percent interest rate, and which was to mature in three equal instalments starting May 2025. The repurchase was financed using proceeds of a new 11-year, $1.5 billion paper issued at 9.5 percent.
The third buyback was done in October last year, targeting the same 10-year 2018 bond that is the subject of the latest refinancing transaction.
Similar to the current buyback, the October 2025 tender also fell short of its target of $1 billion, after bondholders agreed to sell $628.4 million (Sh81 billion) worth of securities, leaving the balance of $371.56 million in issue.
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