13 lenders line up for Kenya’s syndicated loan
Posted Thursday, August 2 2012 at 19:58
Kenya’s first international syndicated loan attracted 13 lenders from the region and around the globe in which the government raised Sh50 billion ($600 million).
The money will be used to ease pressure on interest rates and boost foreign exchange reserves.
A syndicated loan is offered by a group of lenders, called a syndicate, who work together to provide funds for a single borrower.
Arrangers of the medium-term loan — New York-based Citigroup, Standard Bank of South Africa and London-based Standard Chartered plc on Thursday announced the successful closing of the loan.
However, taxpayers will pay about Sh5.8 billion in interest for the two-year loan that is attracting an interest rate of 4.75 per cent a year above global benchmark rate — Libor — which has averaged at about one per cent in the past year.
“A group of 13 international and regional lenders joined the facility in syndication, highlighting the Republic’s attractiveness to major financial institutions around the globe,” the statement released on Thursday read in part.
The lenders that joined the facility included the Hong Kong and Shanghai Banking Corporation Limited, Johannesburg Branch and PTA Bank as mandated lead arrangers.
United Kingdom’s FBN Bank, British Arab Commercial Bank plc, Bank of India, Ghana International Bank plc, State Bank of Mauritius and Zep-Re (PTA Reinsurance Company) were other arrangers.
Funds received already
Bank Muscat, East African Development Bank, Sanlam Capital Markets Limited and Mauritius Commercial Bank were managers while Atlantic Forfaitierungs AG was a participant.
The facility was fully underwritten by the Bookrunners — Citigroup, Standard Bank and Standard Chartered Bank and was signed with Kenya on May 15, 2012.
The government has already received two tranches of the loan to fund costs approved by Parliament in the fiscal year 2011/12, including infrastructure projects, as well as Constitution implementation costs.
The success of this inaugural benchmark facility is a big boost to Kenya’s credit rating and ability to access the global financial markets to support its continued growth.
Kenya’s credit rating is currently at B+ (stable) according to two credit rating companies — Standard & Poor’s and Fitch.