Kenya Taps Debt Market Thaw for Fresh US Dollars


Kenya is making a strategic move, capitalizing on a recent thaw in the international bond market, to issue new US dollar-denominated debt. This strategic decision, announced on February 8, 2024, aims to refinance part of a $2 billion repayment due in June, a prospect that previously raised concerns about straining public finances.

Market Conditions Favor Issuance:

The decision comes amidst improved market conditions for emerging market debt issuance. After a turbulent period in late 2023, investor sentiment towards emerging markets has grown more positive. This is due to several factors, including:

  • Reduced global risk aversion: Concerns about a global recession have eased somewhat, leading investors to become more comfortable with riskier assets.
  • Improved economic outlook in emerging markets: Growth forecasts for many emerging economies, including Kenya, have been revised upwards, boosting investor confidence.
  • Attractive yields: Emerging market bonds continue to offer higher yields than developed market equivalents, making them appealing to investors seeking higher returns.

Kenya’s Debt Situation:

Kenya’s public debt has been a growing concern in recent years, reaching over 60% of GDP in 2023. The government has been actively seeking to manage its debt burden, including through refinancing existing debt at lower interest rates. The new US dollar debt issuance is part of this strategy.

Key Details of the Issuance:

The specific details of the issuance, such as the amount, maturity, and interest rate, are yet to be announced. However, it is expected that the government will aim to raise between $1 billion and $2 billion. The funds raised will be used to refinance a $2 billion Eurobond maturing in June 2024, potentially freeing up resources for other government spending.

Also Read: The US Dollar Soars as Treasury Yields Hit 2024 Highs

Potential Benefits and Risks:

The successful issuance of new US dollar debt could bring several benefits to Kenya, including:

  • Reduced debt burden: Refinancing existing debt at lower interest rates can help to reduce the overall cost of servicing the national debt.
  • Increased foreign exchange reserves: The issuance could boost Kenya’s foreign exchange reserves, providing a buffer against potential economic shocks.
  • Access to additional funding: If the government raises more than the amount needed for refinancing, it could use the additional funds for priority development projects.

However, there are also potential risks associated with the issuance, such as:

  • Higher interest rates: If market conditions deteriorate, Kenya may have to pay higher interest rates on the new debt.
  • Currency depreciation: A depreciation of the Kenyan shilling could increase the cost of servicing the debt in dollar terms.
  • Increased debt burden: If the government uses the additional funds raised for unproductive spending, it could further increase the country’s debt burden.


Kenya’s decision to issue new US dollar debt is a strategic move that could benefit the country’s economic outlook. However, it is crucial to carefully manage the risks associated with the issuance to ensure that it contributes to long-term sustainable growth.