Kenya Mortgage Refinance Company (KMRC) has been given the green light by the Capital Markets Authority (CMA) to roll out a Kshs 10.5 billion medium-term bond programme.
KMRC targets to raise Kshs 1.4 bn during the first tranche of issuance at a 5.0 per cent rate, for onward lending to homebuyers at single-digit rates.
The participating primary mortgage lenders (PMLs), which are also KMRC shareholders include KCB, Co-operative, DTB, HF Group, NCBA, Absa, Stanbic and Credit Banks. The SACCO PMLs are Kenya Police, Mwalimu National, Safaricom, Ukulima, Bingwa, Imarisha, Unaitas Imarika, Tower, Stima and Harambee. The sole MFI is Kenya Women Finance Trust (KWFT).
“The cash raised from the issuance, whose first tranche is Sh1.4 billion, will be disbursed to participating primary mortgage lenders (PMLs), for onward lending to mortgagers,” said KMRC chief executive officer Johnstone Oltetia.
“Through this issuance, KMRC seeks to build its profile as a regular issuer of bonds in the Kenyan capital market as we work to raise more long-term capital, thereby refinancing more home loans and making them affordable and accessible for Kenyans.”
CMA CEO Chief Wyckliffe Shamiah, says KMRC’s bond positions the capital markets as a source of funding to support productive economic activities such as the delivery of affordable housing.
”One of the constraints of the growth of housing in Kenya is the financing constraint with total mortgages in Kenya at under 30,000 as mortgages remain out of the reach of many Kenyans, while the houses units in the market are also relatively expensive,” Shamiah said.
The KMRC bond will be listed at the Nairobi Securities Exchange (NSE).
In November 2021, CMA approved the issuance of a Kshs 3.9 billion corporate bond to finance the construction of the ongoing Pangani Affordable Housing Project.
In addition, KMRC seeks to build its profile as a regular issuer of bonds in the Kenyan capital markets, as they work to raise more long-term capital.
KMRC has raised about Kshs 37.0 billion since 2020, with the World Bank has extended approximately Kshs 25.0 billion to KMRC in the form of a concessional loan through the National Treasury.
The African Development Bank (AfDB) injected Kshs 10.0 billion, and, the remaining Kshs 2.0 billion was in equity capital.
Furthermore, KMRC already acquired a good credit rating of AA- in August 2021, from the South African agency GCR, and this is expected to boost the subscription rate of the bond.
Other private bonds issued in 2021 include the Centum Investments Company Plc KSh4 billion medium-term note, and the KSh8 billion multi-currency Family Bank medium-term note which recorded an oversubscription of 147 per cent.