Eight banks have loaned Sh4.3bn to Kenya Airways as part of capital restructuring

Equity Bank and the Kenya Commercial Bank (KCB), along with six other financers, have provided loans for Kenya Airways.

In total, the eight banks have financed Kenya’s national carrier with Sh4.3bn (US$42.5mn).

The loans, which are protected by government guarantees, were provided as part of Kenya Airways’ ongoing capital restructuring.

Kenya Airways defaulted on the initial loan of Sh16.7bn, offering shares that made up 38.1% stake.

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The Commercial Bank of Africa, I&M, the National Bank of Kenya, Diamond Trust Bank, NIC Bank, and Ecobank also provided funding for the airline.

Jamii Bank and Chase Bank were part of the original lending scheme, but chose to opt out of the most recent financing plan.

“The same banks with the exception of Chase Bank (Kenya) Limited and Jamii Bora Bank Limited gave a new term loan to the company amounting to Sh4.3 billion,” says the airline.

The banks’ loans have an average interest rate of 7.2% - lower than the risk-free rate of 10.9% from one-year T-bills.

The loans will mature in 2027, which the government has agreed to pay if Kenya Airways is unable to.