Afreximbank and TDB close $500 million syndicated loan facility for Kenya
The Trade Development Bank (TDB), formerly known as PTA Bank, and the African Export-Import Bank (Afreximbank) have closed a $500 million dual-tranche syndicated loan facility for the Government of Kenya which acted through the country’s National Treasury.
The facility, for which Afreximbank and TDB acted as joint mandated lead arrangers (MLAs), is part of a $1.55 billion debt package of three facilities being arranged and raised in parallel by the National Treasury in the first quarter of 2017.
The Afreximbank and TDB-led facility comprises two tranches made up of a $200-million 10-year amortizing loan by TDB and a $300-million five-year amortizing loan provided in equal parts by Afreximbank and TDB. The two tranches will be syndicated to development finance institutions.
TDB acted as initial mandated lead arranger, underwriter, documentation bank, joint bookrunner and facility agent for the facility while Afreximbank acted as mandated lead arranger, underwriter and joint bookrunner.
Linklaters, London, and IKM, Nairobi, acted as the lenders’ international and local legal counsels while Simmons & Simmons acted for the Government.
With the closing of the facility the Government successfully completed its $1.5 billion debt raising exercise through the loan market. The two other facilities are:
An $800 million dual tranche 2/3 year facility arranged and underwritten by Citi Bank, Rand Merchant Bank, Standard Bank, and Standard Chartered Bank, which the four MLAs are currently syndicating to commercial banks; and a $250 million two-year syndicated facility arranged and underwritten by TDB, which is also in syndication by TDB.
With the facilities, the Government of Kenya has achieved unprecedented borrowing benchmarks with new tenors at the 2, 3, 5, and 10 year marks from different investor groups.
The MLAs of the $800 million commercial bank facilities successfully stretched the Government’s previous borrowing tenor from two to three years, in line with other blue chip borrowers on the African continent.
By providing five and 10 year financing, Afreximbank and TDB, emerged as market makers, setting new tenor benchmarks for future borrowings by the Government as the longer tenors provide significant additional value to the Government which has been seeking to gradually replace its shorter term liabilities with longer dated ones.
“This debt raising exercise stands out in more ways than one – as an achievement in the syndicated loan market, as a confirmation of investor confidence for Kenya and as a further step towards better facilitation of inter-African trade,” said Dr. Benedict Oramah, President of Afreximbank. “Afreximbank’s support for the projects to be financed with the proceeds of this facility are consistent with the ‘Deliver’ pillar of our Intra-African African trade strategy which aims to create enabling logistics infrastructure for efficient intra-regional trade.”
“Our rebranding represents our rejuvenation and recommitment to innovate and play a more active role in promoting trade, economic development and regional integration. In December TDB approved a USD250M facility to the Government of Kenya, the Bank has played a key role in raising up to USD750M for Government of Kenya in this current Financial Year,” said Admassu Tadesse, President and Chief Executive of TDB. “TDB will continue financing of trade, enterprise and infrastructure, which is evidenced in the tripling of our loan assets in the past two years in Kenya a demonstration of the Banks commitment to the Kenyan Economy”.
Afreximbank and TDB have supported the Government of Kenya and select state-owned enterprises in the past in line with their trade-related mandate of financing trade-enabling infrastructure and their belief that supporting the development of infrastructure, such as roads, ports and energy in Kenya, is key to facilitating trade and creating better access to world markets for landlocked countries in East Africa.