The African Development Bank (AfDB) gas agreed to guarantee a debut bond issue by the Kenya Mortgage Refinancing Company (KMRC).
KMRC Chief Executive Officer Johnstone Oltetia revealed that the deal with AfDB allows the lender to rely on AfDB’s top credit rating (AAA) with a stable outlook for the bond issue which is planned for the third quarter of next year.
“We will issue the bond when we are still drawing down the credit line from the World Bank and African Development Bank, but a new institution like KMRC doesn’t have a track record and that means you face a bit of challenge raising funds,” Mr Oltetia said.
In the arrangement with AfDB for a credit enhancement, KMRC’s position will be replaced by AfDB’s balance sheet, which is AAA rated, to support the bond issue.
KMRC which has mobilized funds for onward lending to banks and saccos at a subsidized rate enabling them to give home loans at single-digit interest to be repaid in 20 years, said it is not worried about supply since a number of private developers are already aligning towards affordable housing.
Mr Oltetia said KMRC has started introducing the developers to participating institutions to start showing their developments to the banks which can then start interesting their customers in those developments.
The lender has backed the redevelopment of old estates in Nairobi such as Old Park Road Estate in Ngara, Jeevanjee/Bachelors Quarters, Ngong Road Phases I and II, Uhuru Estate and Suna Road Estates to help fill the gap in supply in the short-term.