Ruto vows to buy back half of Kenya’s $2 billion bond this year

Bloomberg | Kenya plans to repurchase at least half of its US$2 billion eurobond that’s maturing in June 2024 before the end of this year, President William Ruto said.

Investors were concerned that the east African nation does not have enough cash to settle the payment due to competing priorities and a drop in its foreign-exchange reserves. The government has at least once delayed pay for civil servants, and hospitals have been turning away patients on a government medical program.

“The people who are looking to make a kill from this, they think they can scare us and create a narrative around it,” Ruto said in an interview with Bloomberg TV Thursday on the sidelines of the Summit for a New Global Financing Pact in Paris, referring to the speculation. “I want to promise them that we are going to redeem half of it before the end of the year and we will square it out before time lapses next year. We are in a good space.”

He did not elaborate how his administration will finance the repurchase.

Kenya may use US$1 billion received from the World Bank, proceeds from a syndicated loan and other funds from development banks and the International Monetary Fund to pay the debt, a person familiar with the matter told Bloomberg last week, but asked not to be identified.

Repurchasing the bond before maturity will allow Kenya to lock in a favorable price. The security issued in 2014 at 6.9 percent was trading at US$0.94 on the dollar by 16:57 p.m. in Nairobi, down from US$1.12 in March 2021.

Ruto also urged multilateral lenders to restructure African debt by extending repayment periods to give low-income countries room to deal with more pressing challenges.

“Emergency liquidity and debt, we can agree with our multi-lateral lenders,” Ruto said. “We convert the debt we are supposed to pay into long-term debt, maybe paid in 50 years. We will not get everything in one go, but there are certain irreducible minimums.”