The government’s successful settlement of part of the 2 billion U.S. dollars Eurobond debt eliminated the fear of default, lifting the country’s profile in the international markets. The debt falls due in June 2024, and there were fears that the country would default on repayment especially after it missed a promise made by President William Ruto that it would be repaid in December 2023.

President William Ruto said that the government used the 1.5 billion dollars it had raised on February 12 in a buyback issue to settle the debt.

The buyback offer received strong demand, according to Treasury, with investors making orders exceeding $6.2 billion. The Eurobond issuance was priced at 9.75 percent and would be due in 2031.

The buyback plan strengthened the maturity profile of the 2024 Eurobonds and helped the country proactively manage its debt liabilities.

“The successful execution of both the buyback and the new bond demonstrates strong investor confidence in Kenya through the international capital markets and a vote of confidence in the government’s overall debt management strategy,” President Ruto said. Kenya had been rated negatively by global credit agencies, what had for long hurt the country’s chances to attract cheaper loans from international markets.

In July 2023, Standard&Poor cut Kenya’s ratings outlook from stable to negative while Moody’s assigned Kenya a B3 with a negative outlook.

Similarly, Fitch had in February 2023 rated Kenya at B with a negative outlook. The country’s credit ratings had remained stable in 2021 and 2022 before the downgrade. But with the successful debt management strategy through the repayment of the Eurobond, the country’s rating has improved.

President Ruto said the debt strategy, coupled with the general economic management policies and the tightening of the monetary policy, investor confidence in the country has grown.

This has, therefore, resulted in the appreciation of the shilling against the dollar from 162 to 142. The President attributed the recent steep decline of the shilling to “adverse developments in the international monetary system and disruptions in the global supply chains”.

The strengthening of the shilling against the dollar, according to the President, has reduced Kenya’s overall debt by Sh722 billion (4.95 billion dollars) and also cut the debt service costs by 1.33 billion shillings over the next six years, saving the country a total cost of 6.29 billion dollars.

Central Bank of Kenya data indicates that the East African nation’s total debt stood at 76.1 billion dollars at the end of 2023, with external debt comprising 41.7 billion dollars of the amount.