Kenya has approached the Trade and Development Bank (TDB) for a conglomerate loan to pay off its five-year Eurobonds maturing in 2019.
According to Bloomberg, the Government is seeking approximately $800 million (Kshs80 Billion) and $1 billion (Kshs100 Billion) to offset some of the debts.
They intend to pay TDB within a period of seven years. The loan's interest is expected to be higher than other loans including the Eurobond.
The syndicate loans are more expensive because they are easier and quicker to process, and the government is under no obligation to reveal the loans' details to the public.
In 2015, Kenya contracted a two-year Ksh75 billion syndicated loan that yielded 8 per cent interest, according to International Monetary Fund data.
This is in comparison to the nation’s five-year Eurobonds issued in 2014 which yielded a 6.035 per cent interest.
The rate of borrowing in Kenya has raised alarm with the nation owing debts that have escalated for the last six years.
The IMF warns that the borrowing has raised concerns about vulnerabilities in the national budget and increased interest payments due to the ballooning loans.
However, even with other loans, Kenya continues to borrow to facilitate its fiscal budget. It is anticipated that the country will borrow Kshs273 billion to facilitate the 2019 fiscal budget.
Attempts to reach the Government for comments on details about the TDB loan arrangements were futile. TDB also declined to issue a comment promising to release a public statement.
