Consolidated Bank bondholders have resolved to push their payment period by three months to next month.
This is after the National Treasury gave the cash-strapped bank a financial lifeline of 1.5 billion shillings.
The 7-year bond issued in the year 2012 was supposed to mature in July this year, but Consolidated Bank was forced to seek a reprieve from investors after the bank ran into cash-flow problems.
Consolidated Bank of Kenya which is 86 percent owned by the National Treasury got a lifeline last month when Treasury announced it will bail out the lender to help repay holders of its 1.5 billion shillings corporate bond that was due in July.
Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 20153
Bondholders voted to give the bank 90 days to help the lender pay interest rates and together with their principal amounts.
The extension will give the bank time to organize its books. The bank is one of the three state owned financial institutions alongside National Bank of Kenya and Postbank earmarked for privatization.
Had Consolidated Bank defaulted on servicing the corporate bond, the bank would have joined a list of corporate bond issuers that have defaulted or restructured their debt, impacting negatively a niche market that is struggling with loss of confidence from investors.