NAIROBI: Kenya’s government is in talks with banks for a $750 million syndicated loan, a person familiar with the discussions said after a local newspaper reported on the negotiations.
The talks involve three lenders, said the person, who asked not to be identified because discussions haven’t concluded yet. The Daily Nation, a Nairobi-based publication, reported on Monday that the government is in talks with CfC Stanbic Holdings, Citigroup Inc. and Standard Chartered and that an agreement is expected to be signed within two weeks.
The money would be used to ease a cash crunch in government coffers, the Nation reported, citing Treasury Principal Secretary Kamau Thugge. A Treasury spokesman didn’t respond to phone calls when Bloomberg sought comment.
Citi’s chief executive for East Africa, Joyce-Ann Wainaina, said there is a process going on and declined to give further details. Phone calls to CfC Stanbic didn’t connect.
Kenya’s borrowing costs have risen in recent months after the central bank in East Africa’s biggest economy raised its benchmark rate by a cumulative 3 percentage points in June and July to check foreign-exchange market volatility.
The shilling has recouped some losses and moved away from trading near record lows since, even as interest rates have climbed. The currency was largely unchanged at 103.06 against the dollar at 12:07 p.m. in Nairobi.
At its latest treasury bill auction, the central bank received bids worth more than four times the 4 billion shillings it had sought. The three-month paper had a weighted average rate of 21.35 percent, up from 20.64 percent in the previous sale. It accepted 12.6 billion shillings. Kenyan Treasury Secretary Henry Rotich said in a September 17 interview that the government would raise money from external sources as domestic interest rates rise.
Last year, Kenya sold a debut Eurobond for a total $2.75 billion, from which it paid $600 million for a syndicated loan taken earlier. The International Monetary Fund estimates government debt reached 49 percent of gross domestic product in 2014, up from 41 percent in 2009.
