The Treasury wants Parliament to allocate Sh90 million to clear legal fees for lawyers who helped Kenya raise cash and buy back a 10-year Eurobond of $2 billion that matures in June this year.
Treasury Principal Secretary Chris Kiptoo told Parliament that local lawyers have not received payment for the legal services they rendered in February 2024. Kenya in February tapped the international bond market to $1.5 billion bond, which will mature in 2031, and was oversubscribed four times.
“We had the services of legal experts during the Eurobond buyback. We got joint lead managers for the transactions,” Dr Kiptoo said.
“We had six firms that returned requests for proposals and we got two from Citi Bank and Stanbic Bank.”Dr Kiptoo told the National Assembly’s Finance and National Planning Committee chaired by Molo MP Kuria Kimani that the two lead managers needed lawyers to help with the Eurobond transactions.
He said the ministry wrote to Attorney General (AG)Justin Muturi to assist with the lawyers.
“The AG would help us to procure external legal experts. We need Sh90 million to pay them,” he said.
“They did a very good job. I feel bad they have not been paid by now. We had Sh30 million and we need to make it Sh90 million to clear the legal fee.”
Kitui Rural MP David Mboni demanded to know why the Treasury was seeking Sh90 million to pay lawyers: “Why pay Sh90 million to lawyers for negotiating the Eurobond? Don’t you have a legal team? Don’t you have advisors and legal experts at the Treasury?”
Kenya on February 12, moved to avert a default of the $2 billion Eurobond maturing in June after it settled on a higher rate on its return to the global debt market to finance an early buyback.
The country raised $1.5 billion through a more expensive Eurobond issued to global investors to help partially settle the $2 billion Eurobond that was issued in 2014 and which had a June 24, 2024 maturity date.
President William Ruto announced the country had paid $1.5 billion from the proceeds of the Eurobond that was priced at 10.37 percent.
Dr Kiptoo appeared before the committee to defend the budget for the State Department for the National Treasury for the financial year 2024/24, President Ruto’s administration borrowed Sh223.5 billion in the four months to January out of which Sh30 billion went to preparations towards the refinancing or repurchase of the Eurobond.
The Treasury data tabled in Parliament shows that Kenya contracted 11 new loans from multilateral and commercial creditors between September 1, 2023 and January 31, 2024.
The details of the new borrowings show that 10 of the loans are from multilateral lenders, and one from a commercial lender. The report shows that Kenya took a syndicated term loan facility worth Sh30.63 billion ($210 million) on December 28, 2023, from the Eastern and Southern African Trade and Development Bank that will be repaid in US dollars.“
The purpose of the loan is to fund the development projects, refinancing or repurchase of Eurobonds issued by the borrower, and payment of any fees, costs, and expenses in connection with the finance documents,” Prof Njuguna Ndung’u, the Treasury Cabinet Secretary, said in disclosures to Parliament.
“Tranche 1 loans and the Tranche 1 incremental facility loans will be repaid in four equal semi-annual installments of $2,500,000 on each applicable repayment date, Tranche 2 loans and the Tranche 2 incremental facility loans will be repaid in eight equal semi-annual instalments of $12,500,000 on each applicable repayment date, and Tranche 3 loans and the Tranche 3 incremental facility loans will be repaid in 12 equal semi-annual instalments of $8,333,333 on each applicable repayment date.”
