Kenya raises $210m loan as Eurobond payment nears

AFRICAN BUSINESS AND ECONOMYJanuary 20, 2024 at 1:42 PM UTC

TLDR

The Trade and Development Bank (TDB) extends a $210 million loan to Kenya to address debt management concerns.
The loan is part of TDB's mandate to raise $1 billion for Kenya's liability management.
The loan will help Kenya navigate the financial landscape leading up to the maturation of a $2 billion Eurobond in June.

The Trade and Development Bank (TDB) has extended a loan of $210 million to Kenya, as confirmed by Finance Minister Njuguna Ndung'u. This financing comes ahead of the maturation of a $2 billion Eurobond in June. The loan is part of the TDB's mandate to raise $1 billion for Kenya's liability management.

The move addresses concerns related to falling hard currency reserves, a significant weakening of the Kenyan shilling, and challenges in revenue generation, which had raised questions about the country's ability to meet the Eurobond payment. While these challenges persist, the International Monetary Fund (IMF) stated on Thursday that it does not anticipate Kenya to default.

The loan facility from the TDB is expected to provide financial support and contribute to addressing Kenya's debt management concerns, helping navigate the financial landscape leading up to the Eurobond maturation.

Key Takeaways

The IMF recently approved $941 million in lending to Kenya, providing the country with financial relief amid economic challenges. In a letter to the IMF, Finance Minister Njuguna Ndung'u and the central bank governor stated that Kenya intends to access international bond markets as soon as market conditions permit. Following this announcement, the price of Kenya's international dollar bonds saw an increase. Notably, the yields on most of the country's international bonds are now below 10%. Traditionally, issuing new debt is considered expensive when yields exceed this level, and the improved bond yields suggest a more favorable environment for Kenya to explore additional debt financing options when needed.

Kenya

Debt Crisis

Eurobond

IMF