Kenya has successfully issued a fresh and costlier Eurobond of USD1.5 billion (an equivalent of Sh239 billion) to buy back the initial one which is due on June 24, 2024.

In a statement on Tuesday, the National Treasury indicated that the new credit is divided into three equal installments spread over six years with an expected maturity of 2031.

The new Eurobond has been priced at 10.375 per cent, which represents the the highest interest rate which has ever been offered to an African country in the international market.

“The proceeds of the 2023 Eurobonds will fund the offer to buy Kenya's existing $2 billion Eurobonds due in 2024, pending demand in the tender offer. Results are expected on February 15, 2024” Treasury said in a statement.

According to Treasury, the combined transactions are part of government’s plan to proactively manage its debt portfolio and ease the maturity profile of the 2024 Eurobonds.

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The remainder of the 2024 Eurobonds not taken up in the tender offer will be financed through government funds as well as funding from bilateral and multilateral sources.

Treasury believes the approach will help Kenya maintain a relatively low weighted average interest rate in the overall public debt portfolio to ensure medium-term debt sustainability.

The fresh Eurobond comes a week after Kenya Government opened the tender offer for bondholders seeking to buy back its initial Eurobond which was issued back in 2014.

Investors were excited by the buyback announcement with the 2014 Eurobond retirement piling pressure on Kenya’s development plans forcing her to pursue global loan facilities.

Leading the facilities is the $1.5 billion (Sh240.7 billion) set to be facilitated by World Bank by April as part of $4.5 billion (Sh722.3 billion) pledge the lender made in November 2023.