The National Treasury is putting into consideration a Ksh145.6 billion Eurobond issuance equivalent to USD1.12 billion as a cornerstone of its external borrowing strategy for the 2026/27 financial year.

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The sovereign bond, one of several instruments Treasury Cabinet Secretary John Mbadi is deploying to bridge a widening fiscal gap, anchors an ambitious financing plan for the upcoming budget cycle.

Kenya's total borrowing mix for 2026/27 spans multiple instruments, ranging from Eurobonds and Samurai Bonds to Development Policy Operations and project loans from multilateral lenders.

The Eurobond takes center stage largely since the Treasury views it as a way of refinancing the existing Ksh194 billion, roughly USD1.5 billion note maturing in 2031, which carries an expensive interest rate of 9.75 percent.

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That 2031 date was floated in February 2024 to manage a Ksh259 billion or USD2.0 billion maturity deadline, with gradual repayments of the loan set to begin in 2029, leaving Treasury little room to delay a fresh refinancing move.

In the current financial year, Kenya also tapped a Samurai Bond, a yen-denominated instrument popular in Japanese capital markets, raising Ksh62.5 billion under the supplementary estimates for 2025/26.

The Samurai Bond does not feature in the 2026/27 borrowing plan, suggesting it served as a one-off refinancing tool rather than a permanent fixture in Kenya's debt management plan.

On the multilateral front, Treasury has budgeted Ksh170.5 billion through a World Bank Development Policy Operation and Ksh21.3 billion via a similar facility from the African Development Bank (ADB) for 2026/27.

The World Bank’s Days Payable Outstanding (DPO) alone combines Ksh44 billion, or USD340 million from the International Bank for Reconstruction and Development (IBRD)and Ksh53 billion or USD410 million from the International Development Association (IDA), with board approval expected this month.

Project loans remain a significant part of the mix, with  Project Loans Appropriations in Aid ( Project Loans A-I-A) contributing Ksh75.3 billion and Project Loans Revenue adding Ksh116.3 billion to the 2026/27 external financing plan.

📰 Source: Kenyans.co.ke