Kenya raised $1.5-billion via new 7-year 7.875% and 12-year 8.8% bonds, the finance ministry said on Friday, as part of an effort to extend its debt maturities and cut refinancing costs.

The combined 8.7% interest rate was 1% lower than it would have paid at the start of the year, Chris Kiptoo, principal secretary at the Treasury said, while there had been strong investor demand with offers of more than $7.5-billion.

This "move eases pressure on taxpayers, boosts investor confidence and creates fiscal space to fund key development priorities," he said in a statement.

The government is buying back $1-billion of a February 2028 bond and it will use some of the proceeds to finance the repurchase.

The East African country has been working to cut its overall debt, which stands at close to 70% of its GDP, and make repayments more manageable.

The government has revamped its debt maturity management after its shilling currency weakened sharply in the run-up to a big Eurobond maturity in June last year due to market concerns about its ability to pay off that bond.

The new plan involves issuing amortising bonds to avoid the kind of bullet payment it faced last year.

Earlier this year, it also bought back another bond maturing in 2027 as part of the strategy of managing near-term refinancing risks proactively.

The government is also turning to innovative tools to manage its debt load, including a plan to issue a pioneering $1-billion debt-for-food-security swap by March next year.

A team of staff from the International Monetary Fund is currently in Nairobi for talks on a new Fund-supported programme after the expiry of the last one in April.