Kenya plans early partial settlement of $2 billion Eurobond

Kenya's President, William Ruto, has pledged to commence an early buyback of a portion of the nation's $2 billion Eurobond in a bid to alleviate the immense pressure facing the country's currency. This commitment comes at a crucial time as Kenya navigates through volatile market conditions and strives to manage its debt obligations effectively. To shed light on the implications of this strategic move and analyze the latest market trends, CNBC Africa engaged in a live discussion with Kaneja Amani from Standard Bank Group. Amani highlighted the significance of the president's assurance to investors regarding debt repayment, which has translated into a sense of relief in the markets. Furthermore, he emphasized the importance of restructuring Kenya's debt profile in the future to enhance financial resilience and reduce reliance on external borrowings. Amidst concerns about rising debt repayments and foreign exchange pressures, the government faces challenges in striking a balance between internal and external obligations. Amani warned that 2027 and 2028 could pose significant challenges for the Kenyan fiscal landscape, urging proactive measures to bolster local market liquidity and mitigate the impact of external debt. As the government prepares to repay close to $300 million while grappling with currency depreciation, Amani expressed cautious optimism about potential improvements in the global risk sentiment and foreign investment inflows. Transitioning to Uganda, Moody's recent review of the country's credit ratings underscores mounting concerns over debt sustainability and funding risks. Despite Uganda's moderate external debt burden relative to its peers, the shift towards commercial borrowing poses a threat to fiscal stability. Looking ahead, Amani highlighted the importance of a favorable risk environment and the potential for increased foreign investment in both Kenya and Uganda. While market uncertainties persist, attractive real yields and depreciated local currencies may present investment opportunities for forward-looking investors. As the year draws to a close, market participants remain vigilant for signs of stabilization and resurgence in investor confidence. Amidst ongoing challenges and evolving market dynamics, strategic debt management and proactive policy measures are essential to safeguard the financial stability and resilience of East African economies.