Co-operative Bank and the EBRD Sign a US$100 Million Swap Built on Kenya’s New Benchmark Rate
KENYA · BANKING
Key Facts
- —What happened Co-operative Bank of Kenya and the EBRD signed a cross-currency swap programme worth about US$100 million.
- —The first tranche A first tranche of about US$50 million has been executed under the programme.
- —Why it is a first It is the first transaction to use KESONIA, Kenya’s new overnight interbank benchmark rate.
- —What the bank gets Long-term foreign currency funding to lend to manufacturing, agriculture and agro-processing businesses.
- —What the lender gets The ability to raise and manage funding in Kenyan shillings so it can lend more in local currency.
- —What is not published Neither side has said when the second tranche will be executed.
A hundred million dollars, a new benchmark rate, and a lender that wants shillings as much as the bank wants dollars.
Co-operative Bank of Kenya and the European Bank for Reconstruction and Development have signed a cross-currency swap programme worth about US$100 million. The agreement was signed on 16 September 2026.
What Was Signed
The programme is worth about 13 billion Kenyan shillings, or roughly US$100 million. A first tranche of about 6.5 billion shillings, some US$50 million, has been executed.
The instrument is a cross-currency swap. Two parties exchange payment streams in different currencies for an agreed period, then reverse the exchange at the end.
Why Both Sides Wanted It
Co-operative Bank gains long-term foreign currency funding it can lend on to businesses. Its group managing director and chief executive is Gideon Muriuki.
He said the first tranche enhances the bank’s ability to provide long-term, competitively priced foreign currency financing. He linked that to competitiveness and job creation.
The development bank gains the other half of the trade. The swap lets it raise and manage funding in Kenyan shillings, so it can lend more in local currency in Kenya.
The Benchmark at the Centre of It
This is the first transaction to use KESONIA, which stands for the Kenya Shilling Overnight Interbank Average. A benchmark rate is the reference against which floating-rate payments are calculated.
Mutahe Karuoro, the bank’s treasurer, described bringing the benchmark to life as a collective journey. Abdessamad Abouti of the development bank called the transaction an important milestone for Kenya’s financial markets.
Why a Benchmark Matters More Than It Sounds
Without a trusted local benchmark, floating-rate contracts in shillings have to be priced off something else or negotiated individually. That limits what can be written in the domestic currency.
A working benchmark makes shilling-denominated instruments easier to price and compare. The first transaction using it is a proof of concept rather than a volume event.
Where the Money Is Meant to Go
The bank has named manufacturing, agriculture and agro-processing as target sectors. Those are the parts of the Kenyan economy that earn or save foreign currency.
Lending foreign currency to a business that earns shillings creates a mismatch. Directing it at exporters and processors is how banks manage that risk.
Why Local Currency Lending Is the Development Goal
A borrower who earns shillings and repays dollars carries exchange rate risk that a small business cannot hedge. Development lenders have spent years trying to lend more in local currencies for exactly that reason.
This swap is a tool for doing that rather than a loan in itself. The development bank only began operations in Kenya in 2025.
What It Means for Kenyan Businesses
For a manufacturer or agro-processor with a bank relationship, the practical effect is more long-term foreign currency credit available at a competitive price. Access still depends on the usual lending criteria.
For everyone else, the relevance is indirect. A deeper local-currency market eventually lowers the cost of borrowing in shillings.
What Is Not Yet Known
Neither party has said when the remaining half of the programme will be executed. No pricing on the swap has been published.
Nor have lending terms for the end borrowers been set out. The swap is a funding arrangement, not a published credit product.
What to Watch
Whether other Kenyan banks price transactions off the new benchmark. One transaction establishes it, and repeated use makes it real.
Watch also for the second tranche. Its timing will indicate how quickly the first is being deployed.
More: Africa news and analysis, every day from The Rio Times.
Background: ECLAC: Panama Canal Economy Still the Engine as Growth Seen at 4.4%.
Frequently Asked Questions
How large is the programme?
About 13 billion Kenyan shillings, or roughly US$100 million, with a first tranche of about US$50 million executed.
Who are the parties?
Co-operative Bank of Kenya and the European Bank for Reconstruction and Development.
What is KESONIA?
The Kenya Shilling Overnight Interbank Average, the country’s new benchmark interest rate.
Why is this transaction a first?
It is the first to use KESONIA as its reference rate.
What sectors will the money support?
Manufacturing, agriculture and agro-processing.
What does the development bank get?
The ability to raise and manage funding in Kenyan shillings so it can lend more in local currency.
Sources: European Bank for Reconstruction and Development announcement of 16 September 2026; Kenyan press reporting, 17 September 2026; exchange rate from open.er-api.com, 17 September 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.
Read More from The Rio Times