The Kenya Mortgage Refinance Company PLC (KMRC) has announced the listing and the commencement of trading of the KMRC Corporate Bond on the Nairobi Securities Exchange (NSE).
The Company’s first tranche of the Medium-Term Note program was oversubscribed by more than 400 percent, netting applications worth Kes8.114 billion against a target of Kes 1.4 billion. The proceeds raised will enable KMRC blend its inventory of concessional funds and scale up operations, as it seeks to continue to re-finance home loans and make them affordable and within reach for more Kenyans.
“The response to our inaugural bond issue demonstrates the market’s confidence in the KMRC’s model and strategy and is statement to the importance of the Company’s mandate to increase home ownership and transform the country’s housing sector.” notes KMRC’s CEO Johnstone Oltetia.
Speaking during the bell-ringing ceremony at the NSE, the Capital Markets Authority Chief Executive Officer Wyckliffe Shamiah said the overwhelming market response to the Kenya Mortgage Refinance Company Medium-Term Note Programme signals growing investor confidence. Mr. Shamiah observed, “this is 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 National Big Four Agenda. It affirms the growing issuer and investor confidence in the bond market.”
Congratulating KMRC on its tremendous growth over the past few years and welcoming them on the market, NSE Chairman Kiprono Kittony stated: “This is a major milestone not only for the Company but for the exchange as well, given its unique structure and the target sector it will support. It is also the first issuance for the year 2022.”
Since it received its operating license from the Central Bank of Kenya (CBK) in September 2020, KMRC has relied exclusively on concessional funds from the World Bank and the African Development Bank (AfDB), the continental development finance institution (DFI), for long-term capital. KMRC has so far accessed Kes 6.5 billion from the two DFIs through the National Treasury and refinanced qualifying home loans from participating PMLs with rates on the refinanced loans coming down to single digits (below 10 percent), materially lower than previous average rates of 12 percent.
The KMRC is resolving the asset maturity mismatch that has been blamed for high interest rates on home loans in Kenya. The Company mobilizes long-term funds, which it then on-lends to participating lenders, 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.