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Treasury uncertain about return to Eurobond market
The Cabinet Secretary for the National Treasury and Economic Planning John Mbadi (left), and National Treasury Principal Secretary Dr Chris Kiptoo appear before a past sitting at Glee Hotel, Nairobi, on January 13, 2026.
The National Treasury remains uncertain about Kenya’s return to the Eurobond market despite signs of improved conditions, including falling interest rates in the international capital markets.
Treasury Cabinet Secretary John Mbadi says Kenya is still weighing market conditions and its financing requirements even as it favours a return to the market to retire expensive commercial debt.
Kenya tapped the Eurobond market twice last year to ease pressure from the near-term maturity of similar instruments.
Falling interest rates in the international capital markets have emboldened countries in emerging and frontier economies, including Benin, to issue new Eurobonds at relatively lower costs.
“As far as the plan and timing for Kenya to return to the market is concerned, that will be determined by the prevailing market conditions and the status of other expected financing options,” he said.
“Whereas the redemption profile currently looks smooth, there is still room for additional liability management operations, particularly to address other expensive commercial debt instruments in the public debt portfolio.”
In 2025, the Treasury successfully issued two new Eurobonds to refinance similar maturities due in 2027 and 2028, respectively, improving the maturity profile of Kenya’s Eurobonds and pushing the first sizable repayment back to 2031.
Kenya faces maturities of at least Sh129 billion ($1 billion) from Eurobonds in 2031, 2032, 2034, 2036, and 2048, presenting the opportunity to break up the maturities through new issuances, a process dubbed liability management operations.
Last month, the National Treasury’s Public Debt Management Office said Kenya would use proceeds from a Sh129 billion ($1 billion) debt-for-food security swap to make early repayments on outstanding Eurobonds with the view to easing the heavy debt burden.
Kenya has a guarantee from the United States International Development Finance Corporation to support the debt-for-food swap deal. Kenya’s current stock of Eurobonds stands at Sh1.1 trillion ($8.78 billion).
External debt, including Eurobonds, is expected to cost taxpayers Sh597 billion as debt service costs in the current financial year, compared to Sh773 billion a year earlier.
The 2025 liability management operations supported the repayment of Sh116.1 billion ($900 million) and Sh129 billion ($1 billion) Eurobonds, which were set to mature in 2027 and 2028. The partial repayments have brought down balances on the two sovereign bonds to Sh27.5 billion ($213.4 million) and Sh47.9 billion ($371.56million), respectively.
The balances, deemed as modest by the Treasury, are expected to be settled from government revenues, including the Central Bank of Kenya’s official reserves.
The Treasury is prioritising liability management operations in tapping international capital markets as it avoids new net commercial financing from foreign sources.
The government is instead seeking to deepen concessional funding to meet its new foreign financing needs, including tapping from the World Bank’s development policy operations—a cheap funding facility that supports countries in implementing key policy and institutional reforms.
Kenya can still tap cheap financing from the International Monetary Fund through a new funded programme, but the National Treasury has not budgeted for the fund’s resources for the fiscal year to June 2026.
