Kenya began making investor calls today in anticipation of issuing new dollar debt maturing in 2034/2039 to refinance a portion of its external debt.
The country’s Treasury indicated that this transaction would allow Kenya to repurchase approximately $500 million of its Eurobond debt. The refinancing initiative is one of several means by which Kenya intends to flatten out its repayment schedule and relieve immediate pressure on its public finances.
The new bonds would extend Kenya’s debt maturity into the later part of this decade, as the country has been required to make a large number of external debt payments in recent years, including substantial Eurobond maturities that have strained its foreign currency reserves.
Authorities expect that refinancing a portion of the existing debt will allow them to extend payments over time and improve liquidity management. Market analysts believe that this transaction’s success will depend heavily upon the level of investor demand, the prevailing level of global interest rates, and the perception of Kenya’s fiscal reform efforts.
To reduce its budget deficit, Kenya has been implementing a range of tax and spending controls as well as seeking assistance from international lenders. The government is currently facing high debt servicing costs and strong U.S. dollars, which increase the impact of its foreign currency borrowing costs.
Treasury officials are expected to gauge investor demand during the calls before finalising pricing and allocation of the new bonds.