KMRC to resume Ksh.10.4 billion bond program next year

The Kenya Mortgage Refinancing Company (KMRC) is set to wait until mid-2023 before issuing the second tranche of its Ksh.10.4 billion medium term notes (MTN).

According to the mortgage refinancer, the delayed issuance of the second part of the notes will help the company align proceeds from the bond’s program to its mortgages 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,” KMRC Chief Executive Officer Johnson Oltetia told Citizen Digital.

“That balances everything out. We just don’t want to raise money to hold it and so we move with the speed of the mortgages pipeline.”

Earlier in February, KMRC easily 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 Ksh.8.1 billion.

The oversubscription in the issue was despite KMRC facing steep competition from a government infrastructure bond which was available for sale from investors in the same period.

Proceeds from the notes are deployed in diversifying financing for KMRC from other sources such as concessional funding from institutions such as the World Bank and the Africa Development Bank (AfDB).

KMRC is hoping to over the next two years onboard other financial institutions in the issuance of mortgages from the current eight (four banks, four Saccos) by improving their capacities to absorb new mortgage loans.

The refinancer is hoping to expand its pipeline of mortgages issued to Ksh.6 billion by year’s end 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 Ksh.3 billion by mid-July,” added Mr Oltetia.