, NAIROBI, Kenya, Sep 20- Housing Finance has issued a Sh5 billion bond in the market which will enable the mortgage lender to offer non-guaranteed credit to potential home owners.
The bond, which opened on Monday September 20 and closes on October 1, has a fixed interest rate of 8.50 per cent per annum, while the floating rate pricing will be pegged at 3 percent above the 182-day Treasury Bill.
“It’s a very historic day as we launch our first housing bond which will be opened for 10 working days to enable the public and the investors to review the information memorandum and to make a decision on how much they want to take,” Managing Director Frank Ireri said.
Interest payments on both the fixed and the floating rate notes will be disbursed semi-annually.
The issue which matures in seven years is the first tranche of the Sh10 billion bond program approved by Capital Markets Authority which will go along way in increasing housing supply at affordable rates.
The second and third tranches of Sh3 billion and Sh2 billion respectively will be floated before 2013.
Mr Ireri said the bond issuance is part of their funding strategy and follows on the successful Rights Issue of 2008 that raised Sh2.3 billion of additional funds.
“The availability of affordable long-term funding will allow for convenient and effective repayment of such funds,” he emphasised.
Standard Chartered Bank Limited and NIC Capital Limited have been appointed the joint lead arrangers for the program with Cooperative Bank of Kenya being the paying agent. Equity bank is the receiving bank while KPMG will be the reporting accountants.
Housing Finance funds large-scale housing projects to the tune of Sh700m per project to meet its target of 30,000 new housing units per year. The firm is also involved in financing a range of commercial properties that includes office space, retail shopping centers, industrial usage, hospitality and educational use.
Mr Ireri said the firm intends to continue it’s involvement in the supply side of the supply of decent and affordable housing residential units for the middle and lower income housing segments of the market.
He further underscored the importance of the enactment of the Housing Bill which he pointed out would speed up housing development through facilitating access to land for housing and related infrastructure.
The Bill safeguards land zoned for purposes of housing and human settlements from reallocation and also promotes joint ventures between local authorities, developers and landowners in urban and rural areas infrastructure development.
The building code is also expected to spur growth in the industry through introduction of alternative technology. Use of low cost building materials and construction techniques had been restricted in the old building code.
Housing Finance is the only stand alone mortgage finance company in Kenya. As at end of June 2010, the gross mortgage book stood at Sh17 billion representing a market share of 35 percent.