Ruto secures KSh70 billion new syndicate loan as appetite for credit soars
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President Ruto secures a syndicated medium-term loan worth Ksh70 billion (USD 500 million) to support his development agenda
President Ruto secures a syndicate medium-term loan worth Ksh70 billion (USD 500 million) to support his development agenda.
Kenya has closed in on its $500 million (Sh70.4 billion) syndicated loan intended for national development initiatives.
A syndicate loan is one that is provided to a single borrower by a group of lenders, commonly referred to as a syndicate.
The Sh70.4 billion three-year and five-year Syndicated Medium Term Loan facility is a reduction from the $600 million (Sh84.5 billion) that the government had asked to borrow.
The facility was sourced by Citibank, London Branch, Rand Merchant Bank, a division of FirstRand Bank Limited (RMB), The Standard Bank of South Africa Limited (Standard Bank), Standard Chartered Bank (Standard Chartered), and their respective affiliates.
In a statement, the financial institutions announced that the money will help the Ruto administration implement various development projects.
“Mandated by the Government of the Republic of Kenya as book-runners and Initial Mandated Lead Arrangers, are pleased to announce the successful closure of a USD 500 million 3-year and 5-year Syndicated Medium Term Loan (the “Facility”),” read a statement from the lenders.
“The proceeds from the facility will be used by the National Treasury to finance the development projects as per the development budget approved by the Kenyan Parliament for the Fiscal Year 2022/2023,” the commercial institutions announced.
The earmarking of the proceeds for the 2022/2023 budget suggests that the funds will be used to settle part of the government’s outstanding bills, which stood at Ksh537.2 billion ($3.8 billion) at the end of March 2023.
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The Treasury has been seeking the facility since at least March when it mandated CitiGroup of the US, Standard Chartered Bank of the UK, and South African lenders Standard Bank and Rand Merchant Bank to arrange a $600 million facility.
However, the difficult international credit market has delayed the mobilization of the funds, mainly due to high-interest rates, which have also made it difficult for the country to access the Eurobond market.
The loan acquisition came a month after World Bank approved a Ksh138.5 billion loan to help the country ease its debt burden.
Conversely, according to Treasury data, Ruto received Ksh87.73 billion from the IMF between September 2022 – December 2022.
“The total cumulative external disbursements from project loans as of June 12, 2023, stood at Ksh170.71 billion.
“By May 19, 2023, Kenya had received a disbursement of Ksh112 billion (USD 800 million) from a syndicated facility,” read the statement in part.
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