Investment company Centum intends to pay off its dollar-denominated debt soon in order to avoid increasing finance costs on hard currency debt in light of the depreciating value of the Kenyan shilling.
The listed company’s $10 million (Sh1.22 billion) in borrowings as well as the dollar portion of a Sh5. 5 billion ($45 million) credit facility loan taken out by its real estate unit Centum Re in 2020 are among the loans that must be repaid.
Since the U.S. Increased its base lending rate this year to combat rising inflation, which reached a four-decade high this year, dollar loan rates have increased.
Due to sizable dollar borrowings from foreign sources, local businesses like Kenya Power, KenGen, and Safaricom as well as the majority of large banks are significantly exposed to currency rate risk.