Kenya is exploring buying back maturing local bonds using proceeds from the corresponding sale of longer-dated bonds to manage a wall of maturities and ease the strain on public finances, a source with knowledge of the plan said on Tuesday.

The target amounts for the bond buyback will be determined on an ad hoc basis, the source said, factoring in market conditions and other government financing priorities.

The East African nation faces local bond maturities of 495 billion shillings ($3.84 billion) this year alone, according to LSEG data. The country has been struggling with heavy debt repayments in recent years after an infrastructure construction-driven borrowing boom in the years since 2013.

The maturities will rise to 822 billion shillings next year, the data showed, making a strategy shift necessary to improve the maturity profile of the debt, the source said.

Shilling's performance

The central bank did not respond immediately to a request for comment on the plan. Finance Minister John Mbadi was not immediately available for comment.

The plan was first reported by Bloomberg.

Kenya has previously experienced the adverse consequences of confronting a large bullet debt repayment. Its shilling currency weakened in the months leading to February 2024, as markets worried about the government's ability to pay off a $2 billion Eurobond that was maturing in June of that year.

The government managed to issue a new Eurobond to pay off that bond, easing concern and helping the shilling rebound.