Shelter Afrique to issue Sh2.5b bond

June 3, 2011

, NAIROBI, Kenya Jun 3 – Pan African housing development financier  Shelter Afrique is set to issue a Sh2.5 billion three-year bond at the Nairobi Stock Exchange to raise funds for financing private developers.

This is the first tranche of a Sh3 billion medium term note issue in what could stir up activity in the fixed income security market.

Making the announcement, Shelter Afrique Managing Director Alassane Ba said the bond would capitalise on the vibrant housing market and create availability of cheaper mortgage financing to enable more Kenyans own homes.

"This is a big amount to support operational activities in Kenya. Since last year we have been scaling up our activity where we find a lot of opportunities in housing," Mr Ba said.

Shelter Afrique has extended about Sh8 billion in credit to private developers in the local real estate market over the last 10 years.

According to the lead arranger, CfC Stanbic Bank, the date for listing is subject to regulatory approval and the interest rate will be determined by the market upon listing.

Mr Ba said they would be targeting developers with plans to put up housing estates with between one and two thousand units in the middle-income segment.

"If development funds are sourced expensively by housing developers, the costs are usually passed on to end buyers. We are improving our funding kitty by going to the market to source funds, which we will then avail to housing developers at reasonable rates so that this is reflected in the final pricing of the housing unit," he said.

The Kenyan housing sector presents unique opportunity for developers and financiers alike. It is estimated that 150,000 new and additional housing units are required in the urban areas every year yet only an estimated 35,000 are currently produced annually.

Shelter Afrique is jointly owned by 42 African governments, the African Development Bank and African Re-Insurance Corporation.

Established in 1982, the company commenced active operational activities in 1986 and has since then funded a numerous projects in over 25 of its member countries.

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