Kenya Mortgage Refinancing Company bond five times oversubscribed

Investor bids for the bond stood at Ksh.8.1 billion with the issue closing to investor interests last Friday after a two-week sale window.

The high rate of oversubscription points to the heavy interest in the bond by investors with the bond attracting yields of 12.5 per cent per annum and payable semi-annually.

The offer did not have a green-shoe option meaning KMRC will only be taking Ksh.1.4 billion of the funds raised.

The mortgage re-financier will however take confidence in its next issue with the first tranche sale having attracted bids close to its entire Ksh.10.4 billion medium-term notes (MTN) program.

Proceeds from the issues are expected to firm up the company’s capital base by complimenting financing from other sources such as concessional funds from the World Bank and the African Development Bank (AfDB).

“The success of this first issue represents a resounding validation of our business model and strategy by investors. The cash raised will enable us to blend our inventory of concessional funds and therefore substantially scale up our operations, as we seek to refinance more home loans and make them affordable and within reach for more Kenyans. This success will certainly provide KMRC with a positive track record which is critical for opening the door to what will be an active pipeline of bond issues, going forward,” said KMRC CEO Johnstone Oltetia.

KMRC was born out of a public-private partnership with its principal role being providing long-term funds to primary mortgage lenders such as banks and Saccos which lateron lend the funds as cheap mortgaged loans to clients.

For the Capital Markets Authority (CMA), the oversubscription of KMRC bond is a confidence marker to the corporate bond market which has registered renewed issuer and investor interests over the past year.

“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,” said CMA Chief Executive Officer Wycliffe Shamiah.

The KMRC bond is expected to be listed on the floor of the Nairobi Securities Exchange (NSE) on March 14 while redemptions on the paper commence in March 2023.

The heavy interest in the issue by the re-financier came against a competing infrastructure bond by the State.