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Banks warned of risks from State corporation reforms
Bowmans says guarantees, comfort letters and support agreements tied to specific statutory corporations may not automatically survive the transition, depending on their wording.
Commercial banks should reassess the billions of shillings in loans extended to State corporations, experts have said, warning that government backing of the debt may not be guaranteed under the new law which transformed many public agencies into public limited liability companies.
Analysts at law firm Bowmans said lenders should treat State-owned enterprises (SOEs) as standalone entities on the strength of their own balance sheets, rather than quasi-sovereign borrowers with government support as has been the case in the past.
