Kenya Hires StanChart, Citigroup, RMB for $800 Million Syndicated Loan

NAIROBI (Capital Markets in Africa) – Kenya’s government mandated four international banks to raise $800 million in syndicated loans that authorities need to boost foreign-currency reserves and plug a widening budget deficit, according to two people familiar with the agreement.

The East African nation’s Treasury informed the Nairobi-based units of Citigroup Inc., Standard Bank Group Ltd., Standard Chartered Plc and Rand Merchant Bank on Tuesday that they were appointed to arrange the financing, the people said, asking not to be identified because they aren’t authorized to speak about the matter.

The funds are expected to be made available to the Kenyan government by February, the people said. Stanbic Holdings Ltd., the Kenyan unit of Standard Bank, didn’t immediately respond to an e-mailed request for comment, andStandard Chartered Bank Kenya Ltd.’s spokesman didn’t reply to a request for comment sent by text message. A Citigroup spokeswoman said she would respond to a request for comment later, while RMB declined to comment.

Kenya plans to raise 154 billion shillings ($1.5 billion) through external borrowing in the current budget year that ends June 30. It’s already secured $250 million from lenders led by PTA Bank, an East African trade-finance lender based in Burundi, Treasury Principal Secretary Kamau Thugge said last week. Thugge didn’t respond to a text-messaged request for comment.

Kenya may opt to repay the syndicated loan over a three-year period to avoid having too large a payment when its five-year Eurobonds fall due in 2019, one of the people said.

“We will let you know when we do” the syndication, Treasury Secretary Henry Rotich said when asked to comment on the loans syndication.

The World Bank has estimated Kenya’s financing gap at 9.6 percent of gross domestic product in the 2016-17 financial year, from 7.2 percent in 2015-16.