Home News Business News KMRC gets nod to float Ksh10.5 billion bond

KMRC gets nod to float Ksh10.5 billion bond


The Kenya Mortgage Refinance Company (KMRC) has received approval from the Capital Markets Authority (CMA) to issue a Medium-Term Note Program, through which it seeks to raise up to Ksh. 10.5 billion in various tranches.

The cash raised from the issuance, whose first tranche is Ksh. 1.4 billion will be disbursed to participating primary mortgage lenders (PMLs), for onward lending to mortgagors.

This is the first time the company is issuing a Medium-Term Note Programme to raise long-term capital, in its quest to reduce mortgage interest rates and lengthen repayment tenors, thus, making housing affordable..

Hitherto and since it started operations in 2019, KMRC has relied exclusively on concessional loans from the World Bank and African Development Bank (AfDB), the continental Development Finance Institution (DFI), for such funds.

”This is an important milestone for KMRC as it aims to blend and diversify its sources of funds. 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 re-financing more home loans and making them affordable and accessible for Kenyans,” said Johnstone Oltetia, CEO, KMRC.

The KMRC business model works by resolving the asset maturity mismatch that has contributed largely to high-interest rates on home loans in Kenya. The company mobilizes long-term funds, which it then on-lends to participating PMLs, which include commercial banks, savings and credit cooperatives (SACCOs) and microfinance institutions (MFIs).

The lenders are then able to match the maturities of the long-term credit available to them from KMRC with the home loans they offer to borrowers, resulting in lower interest rates, hence driving affordability. This issue follows KMRC’s receipt of an issuer rating of AA- from GCR, the rating agency, which was granted in August 2021.

The participating 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).

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