Kenya Airways Ltd., sub-Saharan Africa’s third-biggest airline, rallied the most in more than three years, climbing for a fifth day after agreeing a financing deal for the purchase of aircraft.
The stock jumped 9.5 percent to 14.35 shillings by the close in Nairobi, the biggest gain since March 2009. The five-day rally is the longest since Nov. 25, according to data compiled by Bloomberg.
KQ, as the airline is known, said June 25 it will borrow $1.9 billion from African Export-Import Bank to fund the purchase of 20 Boeing Co. and Embraer SA aircraft. The financing will be split into two components, with $3 million to be used for pre-delivery payments loaned over a seven-year period and the remainder to be paid back over 10 years, the company said.
“The loan will only be disbursed at the point of procuring the aircraft,” Eric Musau, a research analyst at Nairobi-based Standard Investment Bank Ltd., said in a phone interview today. “A lot of the fears that we had seen on the part of investors following the under subscription of the rights issue and industry performance have eased because all the bad news has been priced in.”
The airline said June 8 it raised 14.5 billion shillings ($172 million) in a sale of stock to existing shareholders. The carrier, based in Nairobi, received applications for 1.03 billion shares, or 70 percent of the total for sale. It had sought to raise 20.7 billion shillings to fund a plan to expand across Africa.
Net income slumped 53 percent to 1.66 billion shillings in the 12 months through March, the airline said June 14. Profit was less than the 1.94 billion-shilling average of five analyst estimates compiled by Bloomberg.
KQ shares have fallen 27 percent in 2012, the biggest drop on the Nairobi Securities Exchange All Share Index, which has climbed 26 percent.