The Kenya Mortgage Refinancing Company (KMRC) is set to wait until mid-2023 before issuing the second tranche of its KSh10.4 billion medium term notes (MTN). According to KMRC, the delayed issuance of the second part of the notes will help the company align proceeds from the bond’s program to its mortgage pipeline.
“Market timing is very important and that’s why we are talking about mid-next year. The kind of bonds we are issuing are more or less backed by the mortgages,” said KMRC Chief Executive Officer Johnson Oltetia.
KMRC recorded an oversubscription with bids worth KSh 8.1 billion received
Earlier in February this year, the state mortgage lender raised KSh 1.4 billion from the first tranche of its MTN program, with the issue being oversubscribed by nearly five times with investor bids at KSh8.1 billion.
The oversubscription in the issue was despite KMRC facing steep competition from a government infrastructure bond available for sale from investors in the same period.
Proceeds from the notes are deployed in diversifying financing for the mortgage lender from other sources, such as concessional funding from institutions such as the World Bank and the Africa Development Bank (AfDB).
KMRC is hoping to onboard other financial institutions over the next two years in the issuance of mortgages from the current eight (four banks, four Saccos) by improving their capacities to absorb new mortgage loans.
The firm targets to expand its mortgage pipeline to KSh6 billion by the end of 2022 after disbursing KSh 1.3 billion to primary mortgage lenders, including Housing Finance, Tower Sacco, Stima Sacco, Unaitas Sacco, Credit Bank, Co-operative Bank and Ukulima Sacco.
“We have a KSh.9 billion pipeline which we are still building. A lot of it has been reviewed and we actually expect to disburse a further KSh3 billion by mid-July,” said Oltetia.