Kenya dodges default but pressures remain

Kenya has successfully issued a new Eurobond worth $ 1.5 billion (Sh238 billion) to pay off the inaugural one due on June 24. This new loan will help pay back a loan from before. It's split into three parts and will take about six years to pay back completely, maturing in 2031.

They had to agree to a pretty high interest rate, 10.37 percent, which is the highest any African country has ever offered. Other countries like Cote D'Ivoire and Benin got loans earlier with lower interest rates. Cote D' Ivoire's and Benin's February bonds, which raised $2.6 billion and $750 million were priced at between 8.5 and 7.5 per cent.

The money from this new loan will go towards paying back a different old loan, around $2 billion, that Kenya owes. This way, they can manage their debts better. If there's any of the old loan left after this, Kenya will use a mix of its own money and loans from other countries to pay it off.

Getting this loan was important for Kenya's government to manage its money better. It also shows that people who lend money believe in Kenya's ability to pay back what they borrow.

Just last week, Kenya asked people who had bought bonds from them in 2014 if they wanted to sell them back. This helped make room for this new loan.

People who sold back their bonds got paid for the interest they would have earned if they kept them. And when Kenya announced this new loan, the prices of the old bonds they sold back dropped, meaning they became cheaper for others to buy.

Paying off the old loan has been a big challenge for Kenya. They've had to borrow money from different places to do it. Recently, they got some money from the World Bank, about $1.5 billion, to help out. Over the next few years, they'll get more help from different banks, totaling around $4.5 billion.

The National Treasury is confident they can handle this debt and that Kenya is doing well in the international lending market.