Kenya’s loan book will soar past the Sh11 trillion mark after Citi and Standard Bank, successfully arranged a new Eurobond issue and tender offer, through the National Treasury and Economic Planning. Treasury issued the new Eurobond worth $1.5 billion (Sh194 billion), with proceeds partly used to buy back $579 million (Sh74.7 billion) of Kenya’s 2027 Eurobond amid rising public debt burden.

According to data from the Central Bank of Kenya, public debt stood at Sh10.9 trillion as of December 2024, reflecting continued pressure on the country’s fiscal position.

The transaction led by Citi and Standard Bank closed on March 5, 2025 and was priced at a yield of 9.95 per cent with a 9.50 per cent coupon, with a maturity date of 2036. It has a 10-year weighted average life, with the principal amount scheduled to amortise equally over the final three years.

The proceeds were used to settle a tender offer on March 10, 2025, aimed at reducing the near-term repayment pressure posed by the 2027 bond.

At the same time, the 2025/26 budget faces serious financing challenges with total projected revenues revised downwards by 17 per cent to Sh3.38 trillion.

“The reduced revenue outlook highlight low opportunities for introducing new tax measures,” says the Parliamentary Budget Office.

The successful issuance and partial buyback are part of Kenya’s broader debt management strategy, aimed at smoothing out the maturity schedule and avoiding repayment spikes.

By retiring a portion of the 2027 Eurobond early, Kenya has significantly de-risked its debt profile, a move that may help preserve access to international capital markets at favorable rates.

The transaction drew strong interest from global investors, allowing Kenya to tighten pricing and increase the size of the issuance beyond initial expectations.

The tender offer attracted over 64 per cent participation from holders of the 2027 bond, leaving $321 million still outstanding. This positive investor reception has been interpreted as a sign of strengthened market confidence in Kenya’s fiscal management approach.

“This transaction highlights Kenya’s proactive debt management strategy and reinforces its ability to access global markets even in challenging times,” Citi and Standard Bank said in a joint statement.

Successful transaction

“Our role as Joint Lead Managers for a second consecutive successful transaction underlines our commitment to supporting the Government of Kenya in ensuring debt sustainability.” “This transaction is a testament to the strength of Citi’s Global brand as a Trusted Advisor and Partner to Sovereigns in helping them access Global Capital Markets. It is also a reflection of Citi’s longstanding commitment to supporting the Government of Kenya in achieving its economic transformation agenda and development objectives,” said Martin Mugambi, Citibank Kenya Managing Director & CEO.

This is the second time in recent years that Citi and Standard Bank have worked with the Government to manage its liabilities.  Their advisory role began with Kenya’s re-entry into international markets after a three-year absence and continued with this latest issuance. The banks are positioning themselves as trusted long-term partners in managing sovereign debt across Africa.

The banks are some of the winners in Kenya’s borrowing spree as they harvest fees on bond deals. While the successful Eurobond issuance is a positive sign, the rising stock of public debt remains a concern. Kenya’s debt now exceeds the statutory ceiling, with rising external obligations putting pressure on foreign reserves and debt servicing costs.