Auditor-General finds KSh30bn of 2025 Eurobond proceeds diverted to cover domestic debt

On April 7, 2025 the Auditor-General reported that KSh30 billion of proceeds from Kenya’s $1.5bn Eurobond were used to cover domestic debt obligations rather than the bond’s agreed external-debt restructuring purpose, and concluded this utilisation breached the subscription agreement and related contractual terms.

The audit finding raises covenant and reputational risk for Kenya’s sovereign debt issuance: evidence of contractual deviation can reduce appetite among covenant-sensitive external investors and increase Kenya’s refinancing premium on future external issuance. Any market impact will depend on confirmation, Treasury remediation, and whether noteholders or creditors pursue contractual remedies.

Treasury publication of supporting documentation or formal response to the Auditor-General’s finding; any bondholder or legal challenge.