Published: October 16, 2013
Package is the first time a Chinese bank has used MIGA cover for a non-recourse transaction.
Triumph Kenya, a power-generation company, has secured a US$108mn debt financing package for the construction of an 83MW heavy fuel oil plant in Kenya. Mandated lead arrangers on the funding deal are Stanbic Bank, which provided US$28mn, and International Commercial Bank of China (ICBC), which provided US$80mn.
Kenya Power (KP) has a 20-year agreement with Triumph to purchase power from the plant. Should KP fail to honour the agreement, the World Bank’s Multilateral Investment Guarantee Agency (MIGA) will provide US$102.5mn in contract insurance. It will also cover the Kenyan government’s obligations under a letter of support.
According to Kwame Parker, East Africa head of debt solutions and infrastructure financing at Stanbic Bank, this is the “first time that a Chinese commercial bank has used MIGA cover for a non-recourse transaction” [in which a creditor gives debt to a third party in exchange for a percentage of the total amount, with the third party having no means of redress if the debt remains uncollectible].
It is also likely to be the first time a Chinese financial institution has lent directly to a project company “for a transaction in sub-Saharan Africa that is not related to resource extraction, with no explicit sovereign guarantee”, Parker adds.
ICBC holds a 20% stake in Stanbic Bank’s parent company, Standard Bank Group.