Kenya gets $210 million loan as Eurobond maturity looms
Kenya borrowed $210 million from a pan-African lender, as the government scrambles to raise money before a $2 billion eurobond repayment falls due in five months.
The funding received from the Trade & Development Bank adds to a $685 million loan approved by the International Monetary Fund earlier this week. The National Treasury expects further financing from the TDB before June 30, a spokesman said in response to queries, while additional funds are expected from the World Bank and the African Development Bank.
Kenya is shoring up its foreign-exchange reserves in readiness for the eurobond bullet payment due on June 24. African sovereigns have struggled to refinance their foreign bonds after effectively being locked out of international debt markets since the US Federal Reserve began raising interest rates aggressively in 2022 to fight high inflation.
The yields on Kenya’s 2024 eurobond fell 43 basis points to 14.44% by 11:08 a.m. in the Kenyan capital, Nairobi, on Friday. The Kenyan shilling — Africa’s second-worst performing currency this year — eased 0.2% to 161.85 per dollar.
Central bank Governor Kamau Thugge said in December that the authorities expected about $300 million from the TDB and intended to use the funds to partially buy back the bond. The Treasury didn’t respond to a question about why the government raised less than expected.
Loan Maturities
Kenya’s external-loan maturities amount to “a staggering $3.5 billion” in the current fiscal year, more than double the $1.6 billion in the previous period, according to the National Treasury.
Kenya’s program with the IMF assumes the government will raise $500 million from syndicated loans in the fiscal year through June, the Washington-based lender said in a report published Wednesday.
While the government is raising funding to meet the eurobond repayment, the Treasury has said it’s also pursuing the possibility of a debt rollover. The authorities hired Citigroup Inc. and Standard Bank Group Ltd. in September to advise on that proposal.
The IMF said this week that prior expectations of a full rollover through the issue of new bonds “at a reasonable cost is unlikely to materialize under the prevailing global market conditions.”
