Nairobi, June 14 -- Banks are now betting on a Treasury guarantee to recover their loans from Kenya Airways (KQ) as opposed to the airline's cash flows, citing the weakened business model in the Covid-19 environment.
Eleven local banks including Equity #ticker:EQTY, KCB Group #ticker:KCB and Co-operative Bank #ticker:COOP, in 2017 converted $223 million (Sh24 billion) loans into shares after the Treasury offered a $750 million (Sh80.9 billion) guarantee that also covered the US Exim Bank.
The banks have been valuing the loans based on the interest receivable and what they stand to get from selling KQ shares in the open market to recover their outstanding funds.
However, banks such as Equity have now shifted the model saying the widening ...