Mortgage provider Housing Finance will sell the second tranche of its 7-year bond next month to raise KES 3 billion, the firm announced yesterday. This will be the second and final tranche of a KES 10 billion medium term note that was approved by the Capital Markets Authority in 2010.
The bond was initially scheduled to be issued in three tranches in 2010, 2012 and 2013. The first tranche of KES 5 billion in 2010 was oversubscribed by KES 2 billion. This made the mortgage lender to accept the whole KES 7 billion putting the final tranche to raise the remaining KES 3 billion.
“The funds will raise (Housing Finance’s) involvement on the supply side of residential middle and lower income housing which will in turn create significant mortgage lending opportunities for the company,” Housing Finance Managing Director Frank Ireri read in a statement. The lender which has set its base lending rate at 18% effective October will use the money raised to lend to housing developers.
Kenya with a population exceeding 40 million has a housing deficit with annual demand at 200,000 units per year against a supply of 50,000 units, creating opportunities for firms with reliable capital bases to fund housing developments.
Housing Finance said that details of the bond would be unveiled at the start of the sale of the bond on October 1st with the offer closing on October 12th.