In brief
On 02 October 2025, the Government of Kenya (GoK) announced a tender offer to bondholders of its USD 1.0bn KENINT 7.250% 2028. The tender offer runs until 09 October 2025, with the purchase price pegged at 103.75% of the face value. The purchase price represents 1.0% upswing from the closing price of 102.704 on 01 October 2025, with KENINT 2028 rallying 0.6% in the two trading sessions post-announcement. The buyback will be financed from the combined USD 1.5bn KENINT 2033 and KENINT 2038 that was sold last week Thursday. The primary issuance attracted a book size of USD 7.3bn at its launch with the sale closing at USD 750.0mn for each of the two tenors. KENINT 2033 was sold at a discount of 98.3% of its face value, yield of 8.2% and coupon rate of 7.875%, whereas KENINT 2038 was sold at a discount of 97.134% of its face value, yield of 9.2% and coupon rate of 8.8%.
Our Views
Kenya grabs early opportunity to buyback KENINT 2028 before 2027 election noise
- We applaud the authorities’ proactive move to refinance near-term commercial debt maturities, starting with the partial buyback of USD 579.69mn KENINT 2027 in March 2025 and the latest KENINT 2028 buyback whose results will be announced on 10 October 2025. The green light behind the tender offer has been the relatively lower yields and favourable rating upgrade by S&P in August 2025. Broadly, we also include risk-on sentiment for riskier assets on the back of wider monetary easing cycle and improving financing conditions as favourable tailwinds. With the tender offer uncapped, any-and-all offer, we expect the improved credit profile and enticing purchase price to result in a favourable tender participation of between 60.0% – 80.0%.
KENINT 2033 and KENINT 2038 issuances tip the odds higher for FY26 external financing
- The USD 1.5bn issuance of KENINT 2033 and KENINT 2028, resulting in USD 552.0mn – USD 752.0mn for budget support in our view, tips the scale towards higher FY26 external financing. We expect the authorities to follow through with the USD 1.0bn UAE commercial financing from the Abu Dhabi Fund, targeted to be closed this current quarter, and will be packaged as a privately placed Eurobond similar to the USD 500.0mn tranche in April 2025. The combined USD 1.2bn World Bank Development Policy Operation (DPO) is expected to be finalised in tranches of USD 750.0mn and USD 450.0mn in 1Q2026 and 2Q2026, respectively, as per FY26 ABP. The relatively higher external financing disbursements will undoubtedly lower the FY26 net domestic financing requirements, currently at KES 645.5bn from our estimates.
End of IMF Mission coincides with deadline of KENINT 2028 tender offer
- The IMF Mission team has been in Nairobi from 25 September until 09 October 2025 discussing a potential IMF-supported successor programme. With Article IV Consultations being rescheduled to a later date, this will give the IMF better scope of the debt sustainability impact of the KENINT 2028 tender and latest Eurobond issuances. Nevertheless, the latest liability management operation strengthens our long-held view of no immediate IMF successor programme.
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