Kenya seeks Ksh.111 billion syndicated loan

Kenya is set to return to the international capital markets as it seeks a Ksh.110.8 billion ($900 million) syndicated loan.

The National Treasury has disclosed the planned external commercial borrowing to the IMF even as it doubles down on Kenya’s primary reliance on concessional external financing.

“We have successfully contracted one third of this amount and are in the process of reviewing offers for the remainder,” noted the exchequer.

In the financial year ended June 30, the government failed to raise an estimated Ksh.135.5 billion ($1.1 billion) in external financing from both a Eurobond and syndicated loan amid unfavourable market conditions as global interest rates surged to the disadvantage of debt issuers in emerging and frontier markets.

A syndicated loan refers to financing offered by a group of lenders referred to as a syndicate, and in Kenya’s case, the syndicate represents a number of international banks.

Despite prioritizing external concessional funding, the National Treasury has retained commercial borrowing as an option to meet part of its external financing obligations.

The final budget review and outlook paper (BROP) for instance tabulates external financing at Ksh.105.6 billion in the year to June 2023 out of Ksh.298.4 billion in net foreign financing for the period.

The syndicated loan is expected to prop up Kenya’s borrowing needs for the 2022/23 financial year and tops up recent disbursements from the IMF and an expected Ksh.92.4 billion ($750 million) loan from the World Bank Group.

$1=Ksh.123.14