As part of its efforts to facilitate affordable housing, the Capital Markets Authority (CMA) has approved the issuance of a secured Ksh3.9 billion Medium Term Note programme for Urban Housing Renewal Development Limited.
The Medium-Term Note Programme, which has a Ksh600 million green-shoe option, and an 18-month tenor is a restricted public offer for sophisticated investors.
It will be offered at an interest rate of 11 percent. The proceeds will support an affordable housing project in Pangani in Nairobi, comprising 1,562 housing units is a partnership with the Nairobi County Government.
”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,” Wyckliffe Shamiah, CEO, CMA said.
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 underscored the importance of the innovative capital markets financing solution through a corporate bond to deliver relatively cheaper houses to Kenyans.
He said that the success of this project is expected to be used as a model to structure financing to facilitate the rollout of more affordable houses for which there is growing demand across the country.
He further noted the enhanced issuer confidence in the corporate bond market with this bond coming on the back of the recent oversubscription of 245 percent reported for the EABL medium-term notes listed at the Nairobi Securities Exchange (NSE) last month. CMA approved an issuance to raise Kshs11 billion, but applications were received for nearly Ksh38 billion.
In the last year, the Authority has approved the issuance and listing of the Centum Investments Company Plc Kshs4 billion medium-term note, and the Kshs8 billion multicurrency Family Bank medium-term note which recorded an oversubscription of 147 percent.
The oversubscription of the EABL and Family Bank corporate bond issues by 245 percent and 147 percent, respectively, indicates enhanced investor confidence and growing liquidity in the market.