Kenya’s Eurobond Buyback Strategy
Kenya is making strategic financial moves to manage its external debt more effectively by planning to repurchase a $900 million (Ksh 117 billion) Eurobond before its maturity in June 2027. This Eurobond was initially issued in 2014, and its repayment was due in one large sum, which could strain Kenya’s financial stability.
To fund the buyback, the government plans to issue new Eurobonds worth up to $1.5 billion (Ksh 195 billion), which will have extended maturity periods, potentially reaching the 2030s. This process is known as debt restructuring, where a country replaces old debt with new debt that has more manageable repayment terms.
This is not the first time Kenya has pursued such a strategy. In 2024, the government successfully repurchased another Eurobond from 2014 by using a combination of new debt and World Bank funds. That move helped stabilize the Kenyan shilling and avoid a default crisis.
The Debt Feud Between KPLC & Nairobi County
While Kenya is focusing on managing its international debt, a separate financial dispute is unfolding at the local level between Kenya Power and Lighting Company (KPLC) and Nairobi County Government.
KPLC, the country’s main electricity provider, has been demanding payment for outstanding electricity bills from Nairobi County. The county government, on the other hand, is pushing back, claiming that KPLC owes it money in unpaid land rates and other charges.
- Impact on the Economy – If Kenya successfully executes its Eurobond buyback, it will ease the government’s debt burden and create a more stable economic outlook. This could attract foreign investment and strengthen the shilling.
- Electricity and Public Services at Risk – If the KPLC-Nairobi County debt dispute escalates, there could be power disruptions affecting government offices and essential services like hospitals, street lighting, and water supply.
- Long-Term Financial Planning – Kenya’s approach to handling its Eurobond debt shows the importance of long-term financial planning in managing national debt. The same principle needs to be applied to local government debts to avoid service disruptions.
Kenya is taking proactive steps to manage its international debt, domestic financial disputes like the one between KPLC and Nairobi County highlight ongoing challenges in governance and fiscal responsibility.