The government, through the National Treasury, has announced the acquisition of a new KSh194 billion loan as part of its debt liability management strategy.

Addressing the press on Thursday, February 27, Treasury Cabinet Secretary John Mbadi disclosed that the multi-billion-shilling loan, which has a fixed interest rate of 9.5 per cent, would be repaid in three instalments in 2034, 2035, and 2036.

While making the announcement, the finance minister revealed that the loan, acquired through a Eurobond issuance, had received an oversubscription amounting to KSh646 billion from investors.

According to CS Mbadi, proceeds from the sale of the new Eurobond will be used to service the Ksh116 billion Eurobond which is set to mature in 2027.

A photo depicting a person holding Kenya Shilling notes and US Dollar notes

Photo

Janta Kenya

“Proceeds from the 2036 Eurobond will be used to refinance existing external debt including the planned buyback of Kenya's Ksh166 billion ($ 900 million) Eurobond maturing in 2027,” CS Mbadi revealed.

“The final amount for the buyback will be determined based on demand in the ongoing Tender Offer. Results are expected on March 3, 2025,” the finance minister added.

Mbadi noted that the acquisition of the loan aligns with the government's strategy to smoothen the maturity profile of Kenya's external debt and proactively manage public debt liabilities.

The CS further stated that Kenya’s access to international capital markets underscored strong investor confidence in the country's economic management.

Mbadi went on to commend the strong partnership between the government and investors, whom he said were committed to prudent and sound public debt management.

“Proactively managing public debt remains a key pillar of the Bottom-Up Economic Transformation Agenda (BETA), spearheaded by President William Ruto. This pricing marks another significant step in advancing that agenda,” the CS stated.

The latest transaction comes several months after President Ruto's administration successfully repaid another Eurobond in February last year, four months before its maturity.

The KSh 324 billion Eurobond, which matured in June last year, was acquired in 2014 during former President Uhuru Kenyatta's administration. While its buyback significantly boosted the local currency, it also enhanced investor confidence in the country's monetary policies.

Treasury CS John Mbadi during a consultative discussion with representatives from the National Gender and Equality Commission on December 5, 2024.

National Treasury