Kenya May Reschedule Payment of $600 Million Syndicated LoanDavid Malingha Doya and Stephen Morris
Kenya is considering rescheduling a $600 million syndicated loan as part of its discussions with commercial banks about repaying the debt that matures this month, Treasury Secretary Henry Rotich said.
The East African nation in its 2013-14 budget said it will settle the syndicated loan with the proceeds from a proposed Eurobond, an offering that has been repeatedly delayed since September. The government says it’s prevented by law from issuing sovereign debt until it pays two court awards, made in Geneva in 2012 and London last year, totaling 1.4 billion shillings ($16 million) that must be approved by parliament.
“We are discussing within and with the banks, and are considering various options including retiring the loan, and if we get an offer for rescheduling, we can consider that also,” Rotich said today by phone from the capital, Nairobi.
The two-year syndicated loan was arranged in 2012 by Citigroup Inc., Standard Bank Group Ltd. and Standard Chartered Plc. The government borrowed the funds to finance infrastructure development. The debt paid an interest margin of 475 basis points more than the London interbank offered rate, according to data compiled by Bloomberg.
Rotich didn’t specify how much is owed on the loan.
The court-awarded payments are linked to contracts that the Kenyan government gave to companies to supply communications equipment between 1997 and 2004.
The contracts are related to a corruption scandal known as Anglo-Leasing, in which deals were secured by the Kenyan government through a fake company, according to the Law Society of Kenya, which is trying to block the payments in the country’s Court of Appeal. Kenya’s parliament is currently in recess and is scheduled to resume sitting on June 3.
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