Kenya receives $210 million in loans from TDB, finance minister says

By Duncan Miriri

NAIROBI (Reuters) – The Trade and Development Bank (TDB) has lent Kenya $210 million, Finance Minister Njuguna Ndung’u told Reuters on Friday, ahead of the maturation of a $2 billion Eurobond in June.

Falling hard currency reserves, a steep weakening of the Kenyan shilling and revenue challenges have raised questions about the country’s ability to make the Eurobond payment, although the International Monetary Fund (IMF) said on Thursday that it does not expect Kenya to default.

The loan facility by the TDB, an African development finance institution serving 25 member states, is part of its mandate to raise $1 billion for Kenya’s liability management, Ndung’u said.

He said Kenya was supposed to receive funds in tranches of $500 million, but that the bank had so far only delivered $210 million from its own balance sheet.

Ndung’u did not say how the loan would be put to use. Kenya’s central bank governor said in December that the TDB would lend Kenya $300 million to buy back a portion of the Eurobond.

The IMF’s executive board on Wednesday approved $941 million in lending to Kenya, offering some financial relief.

In a letter to the IMF published on Thursday, Ndung’u and the central bank governor said Kenya intended to go to international bond markets as soon as the market situation allowed.

The price of Kenya’s international dollar bonds rose in response to the news. Most of the country’s international bonds now yield below 10%. When yields are above this level, issuing new debt is usually seen as too expensive.

(Reporting by Duncan Miriri, Additional reporting by Rachel Savage in Johannesburg, Writing by Bhargav Acharya; Editing by Aaron Ross and Philippa Fletcher)