Kenya secures $750 million to pay off earlier loan

The loan comes at a time when pressure is mounting for the government to contain its public debt

The loan comes as Treasury seeks to alleviate fears by lenders about the country’s ability to service its mounting debt which stood at Sh4.58 trillion in November 2017.

Sources told The East African said that the loan came about as four lenders of a $800 million syndicated loan frowned at Treasury’s request for an extension to April this year to settle the debt.

The country had secured the two-year loan that came with an option of six months extension from Citigroup, Standard Bank, First Rand Merchant Bank and Standard Chartered in October 2015.

TDB's loan has a tenure of eight years and will mature in 2025. It comes with higher servicing costs at 6.7 percentage points above the prevailing six-month London Interbank Offer Rate (Libor).

In contrast, the syndicated loan taken in February last year was priced at 5.7 percentage points above Libor, which is currently at 4.85 per cent.

This will see the interest rate on the bridging loan stand at 11.55 per cent, a percentage point higher than the syndicated loan.

Treasury Cabinet Secretary Henry Rotich said last November a six-month extension of the syndicated facility had been agreed with 90 percent of investors. Funds raised from a new Eurobond issue could be used to pay off the outstanding amount, he said.

The extension was partly caused by a prolonged presidential election, after the Supreme Court nullified the first vote and ordered a re-run. That disrupted government programmes and raised the political risks associated with investing in Kenya.

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