Companies feel pain of rising loan interest rates

LOAN (1)

Kenya has started talks with the International Monetary Fund and other development financial institutions for a new loan. PHOTO | SHUTTERSTOCK

The rise in Treasury bill rates to an eight-year high is exposing companies that have taken out loans pegged on the rate to high finance costs, raising their cost of doing business in an already challenging economic environment.

Floating rate facilities issued to local firms are often priced using the rates on Treasury bills as a base before adding a margin while others use the Central Bank of Kenya’s base rate (CBR) as the peg for costing facilities.

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