KMRC attracts over Sh8 billion from its maiden bond issue

KMRC Chief Executive Johnstone Oltetia [File]

The Kenya Mortgage Refinance Company’s (KMRC) inaugural corporate bond has attracted a 579.6 per cent over-subscription — a shot in the arm of the struggling corporate bond market. 

Results issued indicate that the first tranche of Sh1.4 billion, under the Sh10.5 billion Medium-Term Note (MTN) programme attracted applications valued at Sh8.1 billion.

The outcome means that after taking the Sh1.4 billion it had sought in its first foray into the local capital markets, KMRC will literally be leaving a substantial Sh6.7 billion on the table, reflecting impressive liquidity in the market.

The issue did not have a green-shoe option, a provision in the agreement that grants the underwriter the right to sell more shares than originally planned.

The MTN, which was available to investors with a minimum investment of Sh100,000 and subsequent multiples of the same amount, was on sale over a two-week window, which ended on February 18, 2022.

The interest on the corporate bonds, payable two times per year at 12.5 per cent, was its strongest selling point, being a premium above the yield on comparative Government Paper of the same tenor.  “The success of this first issue represents a resounding validation of our business model and strategy by investors,” said KMRC Chief Executive Johnstone Oltetia.

Mr Olteita said the money will be used to refinance primary mortgage lenders including banks and Saccos to make affordable housing loans to 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.”