Kenya syndicated loan of $750 million it took in October 28th 2015 is now due for Payment as the maturity date was set for April 27, 2018.
Principal Secretary Kamau Thugge told Reuters in 2015 that the the two-year syndicated loan deal with Standard Chartered Bank of London, Citi Bank of New York and Johannesburg’s Standard Bank would ease pressure on domestic borrowing and was to attract an interest rate of 5.7 per cent.
The Central Bank of Kenya (CBK) reserves shot by nearly $700 million (Sh70 billion) last week hitting an all-time high of $9.5 billion (Sh950 billion), equivalent to 6.35 months of import cover.
Last month, CBK received about $2 billion (Sh200 billion) takings of the Eurobond that the Treasury raised from international financial markets instantly pushing the reserves to $8.8 billion (Sh880 billion).
That saw the shilling rise to about 101 units to the dollar, up from 102-103 units range it had maintained for the preceding 12 months.
“The Kenya shilling continued its surge against the US dollar to end the week on a high, helped by increased foreign currency inflows. Increased activity on the dollar supply counter, mainly by corporate players, surpassed weak foreign currency demand, pushing the US dollar-Kenya shilling currency pair below a key psychological barrier,” said CBA.
Paying the syndicated loan of Sh64.6 billion could instantly cut down the massive foreign exchange reserves that has been growing in recent weeks and possibly weakening the shilling.
The Treasury is likely to spend less on upcoming syndicated loan repayments as a result of the strengthening of the local unit.
Kenya’s foreign currency total debt including the syndicated loan has risen in the past year to nearly Sh2.5 trillion, with the Eurobond alone adding Sh200 billion to the charges.