NAIROBI, Kenya – Kenya is seeking fresh financing from the Trade and Development Bank (TDB) to refinance a Sh51.6 billion ($400 million) syndicated loan maturing in September, in a bid to ease short-term repayment pressure on the exchequer.
Treasury Cabinet Secretary John Mbadi said the government is negotiating a cheaper facility to replace the existing loan, noting that the move is central to Kenya’s debt management strategy of restructuring external obligations to cut costs and extend maturities.
“We are looking to refinance TDB, but if they are not going to offer us a competitive rate, then we would rather get some money and pay it off,” Mbadi said on Monday. “This is the biggest external debt we are confronted with. Addressing it will help us deal with commercial debt, which has been a big problem for us.”
The refinancing will allow Treasury to avoid dipping into tax revenues to clear the obligation at a time when government spending pressures remain high against slower-than-expected revenue growth.
At the same time, Nairobi is in talks with Beijing to convert its dollar-denominated loans for the Standard Gauge Railway (SGR) into yuan.
Mbadi said the proposed currency swap could slash annual interest payments by half, lowering the effective rate from 6.37 per cent to about three per cent.
Kenya’s debt strategy has also involved tapping global capital markets. Earlier this year, the government issued new Eurobonds to retire portions of its 2024 and 2027 notes, worth a combined Sh374.7 billion ($2.9 billion).
Mbadi confirmed that more buybacks are being considered for Eurobonds maturing in 2028 and 2031, with repayment obligations to be spread between 2034 and 2048.
Data from the Treasury shows that commercial debts—primarily Eurobonds and syndicated loans—stand at Sh1.16 trillion, or 23 per cent of external public debt.
Kenya has also turned to non-traditional funding sources, including a Sh21.8 billion ($169 million) Samurai bond from Japan, to finance energy and vehicle assembly projects.
The diversification, Mbadi said, is part of a broader strategy to reduce reliance on dollar-denominated borrowing.
