KMRC attracts over Sh8b from inaugural corporate bond
Kenya Mortgage Refinance Company (KMRC) has registered more than 400 per cent subscription for its affordable housing bond issue thanks to its attractive returns, market confidence and high liquidity.
It issued the bond looking for Sh1.4 billion at 12.5 per cent but got an overwhelming Sh8.1 billion worth of application.
“Capital Markets Authority (CMA) lauds the 480 per cent oversubscription of the first tranche of the unsecured Medium-Term Note (MTN) Programme issued by the Kenya Mortgage Refinance Company,” the regulator said.
The oversubscription testifies to the heavy liquidity in the market, perhaps the low performance of the stock market as rising yields in the bond market have pulled investors.
This comes after the infrastructure bond was oversubscribed by nearly 200 per cent last week along with other corporate bonds such as Centum.
Capital Markets Authority granted KMRC approval to issue an unsecured Sh10.5 billion medium term note (MTN) programme last month which is being issued in tranches. The notes will also be listed on the Nairobi Securities Exchange (NSE).
Wyckliffe Shamiah (pictured), CMA chief executive while announcing the results said described the outcome as a major milestone which positions the capital markets as a source of funding to support productive economic activities such as delivery of affordable housing, which is one of the pillars of the Big Four agenda.
Investor confidence
“It affirms the growing issuer and investor confidence in the bond market,” he added. The mortgage refinancier will use the proceeds for on-lending by extending long term loans to primary mortgage lenders to increase availability of affordable housing finance in Kenya. Affordable housing is a pillar of the Big Four agenda.
Also approved by CMA was a Sh3.9 billion Medium Term Note Programme for Urban Housing Renewal Development Limited in December 2021, whose proceeds will be used to support an affordable housing project in Nairobi.
One of the constraints to growth of housing in Kenya is financing with total mortgages at under 30,000 as they remain out of reach for many people, while houses that are already in the market are also relatively expensive.
– John Otini
