Co-op Bank, EBRD sign Sh13bn foreign currency financing deal
Co-op Bank said on Wednesday that the first Sh6.5 billion ($50 million) tranche had been executed through a cross-currency swap, becoming the first such transaction to use the Kenya Shilling Overnight Interbank Average as a benchmark reference rate.
NAIROBI, Kenya – The Co-operative Bank of Kenya and the European Bank for Reconstruction and Development (EBRD) have signed a Sh13 billion ($100 million) financing programme aimed at expanding access to foreign currency funding for Kenyan businesses.
The Co-op Bank disclosed that the first tranche of Sh6.5 billion ($50 million) has been executed through a cross-currency swap, becoming the first such transaction to utilize the Kenya Shilling Overnight Interbank Average (KESONIA) as a benchmark reference rate. This financing will primarily target businesses operating in international markets and dealing with foreign currencies, including those in manufacturing, agriculture, and agro-processing.
Co-op Bank Group Managing Director and CEO, Gideon Muriuki, expressed that the first US$50 million tranche will enhance the bank's capacity to provide long-term, competitively priced foreign currency financing. This move is expected to strengthen businesses' competitiveness while contributing to Kenya's economic development and job creation.
The EBRD's Regional Head of Local-Currency Portfolio Management, Abdessamad Abouti, highlighted that this partnership aligns with the bank's commitment to developing local capital markets. The financing programme is expected to increase businesses' access to long-term foreign currency funding, enabling them to secure dollar-denominated loans at competitive rates and longer repayment periods.
Additionally, it will bolster trade finance and working capital facilities for exporters and businesses involved in regional and global value chains, as well as support businesses in managing foreign exchange requirements from imports, exports, and international contracts.
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