Kenya Plans to Repurchase Eurobonds in 2024, Totaling $2.5 Billion
Kenya is set to repurchase eurobonds in 2024, which would bring the total amount of debt repurchased this year to approximately $2.5 billion.
In February, the government announced that it would repurchase over $1.4 billion of its $2 billion eurobond maturing this June through a tender offer launched that month for a new bond, amortized in three equal tranches in 2029, 2030, and 2031. The issuance was subscribed, but at an interest rate of 10.37%, which remains higher than the rates of around 8% obtained this year by Côte d'Ivoire and Benin. The difference is explained by differences in monetary stability and borrowing profiles. For example, Côte d'Ivoire benefits from a more stable currency due to its link to the euro, and its foreign exchange reserves more easily cover its imports.
There remains, therefore, an additional $557 million to be repaid by the end of June to close the file on this eurobond. Furthermore, according to the World Bank, Nairobi should be proactive in its debt management and focus on concessional borrowing to reduce its interest costs and amortization pressure, particularly between 2028 and 2031, to avoid future liquidity shortages. This is why the government is considering a new repurchase of its sovereign bonds, which would bring the total repurchase in 2024 to approximately $2.5 billion. The multilateral financial institution approved a $1.2 billion loan for Kenya last week.
Moreover, the authorities are considering managing the entire debt portfolio using sustainability instruments, such as debt swaps and sustainability-linked bonds. Kenya is an attractive economy, with estimated growth of 5% in 2024 after 5.6% in 2023. What is certain is that the country is no longer considered high-risk by markets and can count on the support of international financial institutions.
