Economy
Kenya gets a new Sh70 billion syndicated loan
Thursday 06 July 2023
The National Treasury building in Nairobi in this photo taken on March 15, 2023. Photo | Denis Onsongo | NMG
Kenya has secured a $500m (Ksh70.4bn) syndicated loan arranged by a consortium of five international lenders, with the proceeds expected to fund ongoing development projects approved in the just-ended fiscal year.
In a statement issued on Thursday, the lenders said that the facility – as previously disclosed – is divided into two tranches of three and five years each, but did not specify the amounts allocated to each tranche.
They also did not disclose the interest terms of the syndicated loan.
“The proceeds of the facility will be used by the national treasury to finance development projects in accordance with the development budget approved by the Kenyan parliament for the fiscal year 2022/23,” the lenders said.
The appropriation of 2022/2023 budget revenues indicates that the money will be used to settle part of the government bonds due, which amounted to Sh537.2 billion at the end of March 2023.
The Treasury has been seeking the facility since at least March when it authorized US Citigroup, UK Standard Chartered Bank, South Africa’s Standard Chartered Bank and Rand Merchant Bank to arrange the $600m facility.
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However, the difficulty of the international credit market has delayed the mobilization of funds, mainly due to the rise in interest rates, which has also made it difficult for the country to access the international bond market.
In the statement, the first four regulators said that the African Export-Import Bank (Afrexim Bank) subsequently joined them as Registry Manager and Mandated Lead Coordinator and allocated its subscriptions for the five-year tranche.
The fact that the state failed to meet its initial target of $600m even after attracting a fifth order point to the tough external debt market, from which the government expects to raise Sh199bn net in the current fiscal year, also with financing. Carry over outstanding Sh281 billion Eurobonds.
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