HF bond Issue oversubscribed by 78pc

October 16, 2012
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Housing Finance MD Frank Ireri. Photo/ FILE
NAIROBI, Kenya, Oct 17 – Housing Finance has raised Sh5.28 billion against a target of Sh2.9 billion from the second tranche of its Bond Issue.

The results, representing a 78 percent oversubscription has seen Housing Finance adopt an allocation policy where all investors have been allotted Sh100,000 in the first round of allocation.

Investors who applied in excess of Sh100,000 are to be allotted on a pro-rata basis of 56 percent rounded off to the nearest Sh100,000.

Proceeds from the Bond Issue will be used for mortgage financing, onward lending to property developers and in increasing Housing Finance participation in the supply of affordable houses targeted mainly at the lower and middle segments of the market.

Housing Finance Managing Director Frank Ireri said the success of the Issue reflects a strong local demand for bonds and a strong belief in the firm’s business fundamentals.

“The positive growth of Housing Finance’s top line and bottom-line, the firm’s growth strategy, scope for revenue generation due to housing demand and a healthy appetite for fixed income security all helped to boost demand for the Bond Issue,” he said.

The issue attracted both local individual and institutional investors.

The second tranche of the Housing Finance bond went on offer on October 1 at a fixed rate of 13 percent and the anticipated listing date has been set for October 30.

The Capital Markets Authority (CMA) in 2010 approved the issue and listing of a 7-year Sh10 billion bond.

Housing Finance raised Sh7 billion in the first tranche in October 2010, which represented an oversubscription of 41 percent above the then target of Sh5 billion.

The firm decided then to exercise the green-shoe option and took the entire Sh7 billion.

Ireri said that the Housing Finance will continue focusing on long term funding solutions for the provision of affordable and adequate housing.

“Housing development is a capital intensive business that requires steady long tenor funding streams that can only be sustained by diversifying our funding sources,” he said.

According to the Ministry of Housing, it is estimated that 200,000 new and additional housing units are required in the urban areas every year, yet only an estimated 50,000 are currently produced annually.

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