$800m loan for Kenya to aid shilling

KENYA is close to signing an $800 million (R10.5 billion) syndicated loan with four banks to help fund infrastructure projects and support the shilling, according to a person familiar with the matter.

East Africa’s biggest economy was expected to sign the three-year facility with Citigroup Inc, Standard Bank Group Ltd, Standard Chartered Plc and Rand Merchant Bank (RMB) yesterday, the person said, declining to be identified because he was not authorised to speak on the matter. Kamau Thugge, the Treasury’s principal secretary, did not answer calls and text messages seeking comment.

The government also secured $500m from lenders led by the Trade and Development Bank, an east African trade-finance bank based in Burundi, the person said. The 10-year loan is in addition to the $250m it raised from the same lenders last month.

Debt repayments

The loans come as the nation faces debt repayments of about $8bn this year, including interest, according to data compiled by Bloomberg. Kenya, which has not ruled out a Eurobond sale, may borrow as much as 250bn shillings (R31.8bn) externally in the fiscal year that begins on July 1, the person said.

That is more than the 206bn shillings the government said it would raise in budget estimates submitted to parliament last week.

The loans come as the nation faces debt repayments of about $8bn this year.

Spokesmen for both Citigroup and Standard Bank referred questions to the Kenyan Treasury. Standard Chartered and RMB declined to comment.

Kenya plans to raise 154bn shillings through external borrowing in the current budget year that ends June 30, to finance a deficit estimated by the Treasury at 9.6 percent of gross domestic product.

Kenya will probably prefer a single placement in the coming 2017-18 fiscal year and sees Eurobonds as a cheaper option, the person said. A second issue, after the nation raised $2.82bn in debut sales in 2014, is still under consideration, although the government remains sensitive to the timing.

The state may increase spending to 2.29 trillion shillings in 2017-18 from 2.23 trillion shillings in 2016-17, according to Treasury estimates. Expenditure may expand to as much as 2.6 trillion in the fiscal year starting in July, according to the presidency. – Bloomberg