Do you understand what Eurobond is and what it means to Kenya’s economy?
A Eurobond is a debt instrument that’s denominated in a currency other than the home currency of the country or market in which it is issued.
Kenya has been increasingly active in issuing Eurobonds since 2014, as the country faces increasing budget pressures and a need to safeguard the domestic economy from the effects of excessive domestic borrowing.
When did it start, how much is Kenya’s total Eurobond debt and when is repayment due?
Kenya has had Eurobond issuances in 2014, 2018, 2019 and 2021. In 2014, the first sovereign bond floated was valued at $ 2.8 billion and was issued in two tranches. In February 2018, the second was valued at $ 2.0 billion, the third Eurobond in May 2019 at $ 2.1 billion and the fourth in June 2021 at $1 billion. Kenya has a debt of $2 billion (Ksh 300 billion) that is set to mature in June 2024.
Below are the current outstanding bonds by maturity:
| Maturity | Coupon Rate | USD Mill |
| 24/06/2024 | 6.875% | 2,000 |
| 22/05/2027 | 7.000% | 900 |
| 28/02/2028 | 7.250% | 1,000 |
| 22/05/2032 | 8.000% | 1,200 |
| 23/01/2034 | 6.300% | 1,000 |
| 28/02/2048 | 8.250% | 1,000 |
| Total | 7,100 |
On 9th November 2023, President William Ruto, through a State of the Nation address, revealed that Kenya will pay the first installment of Ksh 45 Billion ($300 million) Eurobond by December 2023.
“Our efforts to stabilize the situation have yielded such progress that next month in December we will be able to settle the first Ksh 300 million dollars instalment of the $2 billion Eurobond debt that falls due next year. I can now confirm with confidence that we will pay the debt that has become a source of concern to citizens, partners and markets,” Ruto announced.
Should you be worried? Is the Eurobond debt impacting your life?
From the initial Eurobond in 2014 to the most recent one in 2021, the majority of the procedures have remained unclear.
According to the Office of the Auditor General’s (OAG) research, Kenya’s maiden Eurobond issue’s earnings were not traceable to the country’s internal economy.
Moreover, the public is unaware of how the profits from two Eurobonds issued in 2018 and 2019 were used to support the economy.
Since Eurobond funds come in the form of “general budget support” and are not subject to any checks and balances by creditors, there is typically a risk that the funds will be misused. This is especially true given that neither Parliament nor the general public have efficient systems in place to monitor or assess how the funds are being used.