Kenya is considering issuing a new Eurobond to reduce reliance on domestic borrowing as government spending rises on security, drought relief, education, and health, officials said.
Chris Kiptoo, Principal Secretary at the National Treasury, told The EastAfrican that the government was evaluating the timing and size of a potential Eurobond sale following improved conditions in international debt markets.
“The proposed second Eurobond issuance is motivated by improved conditions in the Eurobond market, which make it possible for countries with solid economic and financial performance to raise funds at competitive pricing,” Kiptoo said. He added that the move would relieve pressure on domestic borrowing and free up credit for the private sector.
The Treasury did not provide specific details on the planned issuance, including its timing or target amount, but emphasized that the strategy forms part of Kenya’s broader approach to managing public debt sustainably.
Domestic Borrowing Drives Public Debt Rise
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Kenya’s public debt reached approximately $91.55 billion (11.81 trillion Kenyan shillings) at the end of June 2025, up 11.7% from $81.76 billion a year earlier. The increase was driven largely by domestic borrowing, which rose 17% to $49.0 billion (6.32 trillion shillings), while external debt increased 6.1% to $42.55 billion (5.48 trillion shillings).
The rise in domestic debt reflects fiscal pressures from declining revenues in the first half of fiscal year 2025/26 and increased government spending on emergency and recurrent obligations. Analysts note that high domestic borrowing can crowd out private-sector credit and elevate interest costs, making Eurobond issuance an attractive alternative to diversify funding sources.
Recent Eurobond Activity
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Kenya last issued a Eurobond in October 2025, raising $1.5 billion to buy back $1 billion of bonds maturing in February 2028. That transaction marked the third buyback since 2024, part of what the Treasury describes as a proactive external debt management strategy.
In February 2025, Kenya repurchased $900 million of Eurobonds due in 2027 following a new issuance, and in February 2024, the government bought back $1.44 billion of bonds due in June after raising $1.5 billion from a fresh Eurobond sale. These operations aim to manage rollover risks, extend debt maturities, and take advantage of favorable borrowing conditions in global markets.
Investor Appetite Remains Strong
Kenya’s international bond sales are typically oversubscribed, reflecting robust investor demand for high-yielding debt from sub-Saharan Africa. Improved Eurobond market conditions, coupled with the country’s relatively strong macroeconomic performance, make additional issuance an attractive option to ease domestic financing pressures.
Observers note that balancing domestic and external borrowing is critical for Kenya as it navigates fiscal challenges, including revenue shortfalls and emergency expenditures. By tapping international capital markets, the government can reduce strain on local banks, maintain private-sector lending capacity, and optimize debt service costs over time.
Kiptoo emphasized that any Eurobond issuance would be carefully timed to align with market conditions and Kenya’s financing needs, as part of an integrated public debt management strategy designed to safeguard fiscal sustainability while supporting development priorities.
As spending pressures continue to mount, particularly on security and climate-related relief, a new Eurobond could provide Kenya with a crucial tool to meet obligations without exacerbating domestic borrowing risks, while maintaining investor confidence in its debt management framework.
