Capital Markets Authority (CMA) has approved the issuance of an unsecured KSh10.5 Billion Medium Term Note (MTN) programme by Kenya Mortgage Refinance Company (KMRC), a Government-owned mortgage lender.
This is part of CMA’s efforts to facilitate funding of affordable housing through the Capital Markets and support the Affordable Housing pillar of the Big Four Agenda.
KMRC will use the proceeds for on-lending by extending long term loans to primary mortgage lenders.
The bonds proceeds will be utilized alongside other concessionary funding at KMRC’s disposal.
The Medium-Term Note Programme will be issued in tranches with the first tranche of KSh1.4 Billion.
The notes will also be listed at the Nairobi Securities Exchange (NSE).
The MTN comes on the back of the KSh3.9 Billion Medium Term Note programme for Urban Housing Renewal Development Limited approved by CMA in December 2021.
CMA Chief Executive Wyckliffe Shamiah, while announcing the approval of the KMRC MTN programme, said this is a major milestone which positions the capital markets as a source of affordable funding to support productive economic activities.
Available figures indicate that Kenya has a paltry 30,000 mortgage accounts with new housing units expensive and beyond the reach of many.
CMA recently approved Corporate Bond Issues
Shamiah notes the enhanced issuer and investor confidence in the bond market with the recent oversubscription of 245 per cent reported for the EABL medium term notes listed at the Nairobi Securities Exchange (NSE) in November 2021.
CMA approved an issuance to raise KSh11 billion, but applications were received for nearly KSh38 billion.
In the last one year, the Authority has approved the issuance and listing of the Centum Investments Company Plc KSh4 billion medium-term note, and the KSh 8 Billion multicurrency Family Bank medium-term note which recorded an oversubscription of 147 percent.
The oversubscription of the EABL and Family Bank corporate bond, according to CMA, indicates enhanced investor confidence and growing liquidity in the market.
The state-owned mortgage lender lends to local financial institutions, including 11 Savings and Credit Co-operative Societies(SACCOs), who are among its shareholders.
These SACCOs include Kenya Police, Mwalimu National, Safaricom, Ukulima, Bingwa, Imarisha, Unaitas, Imarika, Tower, Stima and Harambee SACCO.
The KMRC mortgage facility is priced at an annual interest rate of 5%, enabling financial institutions to lend at 7%, six per cent lower than the current market rate of 13%.
The subsidized rate is available to Kenyans earning KSh 150,000 and below per month.
The Government’s Affordable Housing Scheme, which aims to deliver 500,000 new housing units by 2022, is to be implemented through KMRC, which is acting as the implementing arm of the Government’s Affordable Housing agenda.