The European Bank for Reconstruction and Development (EBRD) has finalized a US$ 50 million (€43.1 million) cross-currency swap agreement with the Co-operative Bank of Kenya, marking a major leap forward for Kenya’s financial markets.

The agreement represents the first time the Kenya Shilling Overnight Interbank Average (KESONIA), the nation’s new reference rate for financial transactions, has been utilized in a live market swap. It also serves as the inaugural transaction under a broader US$ 100 million (€86.2 million) facility established between the two institutions.

By deploying KESONIA in an active transaction, the EBRD and Co-operative Bank of Kenya are providing a practical blueprint for the benchmark’s implementation. The move is designed to build market confidence, spur broader adoption of the rate, and deepen domestic capital markets as Kenya aligns with internationally recognized standards.

The transaction directly enhances the EBRD’s capacity to raise and manage liquidity in Kenyan shillings. In turn, this allows the institution to expand local-currency lending, enabling Kenyan businesses to secure growth capital without taking on unhedged foreign-exchange risks when their revenues are in shillings.

“This is an important milestone for Kenya’s financial markets,” said Abdessamad Abouti, Regional Head of Local-Currency Portfolio Management at the EBRD. “We have worked closely with local authorities and market participants to support the development of KESONIA, and this swap shows how reforms can move from design to implementation, reflecting the EBRD’s longstanding commitment to developing local capital markets.”

Mutahe Karuoro, Treasurer at the Co-operative Bank of Kenya, highlighted the collaborative effort behind the agreement: “Bringing KESONIA to life has been a collective journey, one built on trust, technical rigor, and a shared vision for our financial markets. This swap is a first, but it will not be the last. It opens the door for greater liquidity, better price discovery, and stronger participation from local and international investors.”

As KESONIA-linked instruments gain traction, financial regulators and institutions expect transparent pricing and improved risk management frameworks to draw greater interest from both local and foreign investors.

The transaction builds on the EBRD’s expanding operational footprint in Kenya, which began in 2025 with a strategic focus on private-sector growth, financial inclusion, sustainable infrastructure, and the green transition.