Kenya Mortgage Refinance Company (KMRC) seeks Sh1.4 billion from first corporate bond

The Kenya Mortgage Refinance Company (KMRC) is targeting to raise an initial Sh1.4 billion in its bond issuance that will eventually see the company take a total of Sh10.5 billion for onward lending to financial institutions.

The company on Wednesday received approval from the Capital Markets Authority (CMA) to roll out the medium-term bond programme.

KMRC did not however announce the date of the first tranche issuance, saying that it is still making preparations such as onboarding transaction advisors.

 KMRC chief executive officer Johnstone Oltetia said “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.”

“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.”

The KMRC has a credit line of Sh18 billion committed by the World Bank through the National Treasury, and Sh10 billion from the African Development Bank.

It in turn offers funds to banks and Saccos for onward lending at an annual interest of five percent, thus allowing these institutions to offer cheaper mortgage loans to customers at stable rates.

Ahead of the rollout of the bond programme, KMRC has already acquired a credit rating from South African agency GCR —which gave the company an issuer rating of AA- in August 2021.

It had also announced earlier in 2020 that it would seek to have the AfDB act as guarantor for its bond issuance, thus riding on the top credit rating of the pan African lender as it continues to build up its credibility among investors.

Its bond issuance is also a boost to the corporate bond market, which is now showing signs of recovery following a series of successful issuances by listed brewer EABL, Family Bank, Centum and student housing developer Acorn Holdings.

“This is a major milestone which positions the capital markets as a source of funding to support productive economic activities such as the delivery of affordable housing, which is one of the pillars of the National Big Four Agenda,” said CMA chief executive Wyckliffe Shamiah.

The KMRC bond will be listed at the Nairobi Securities Exchange (NSE).