15 November 2012

Kenya: HF Sh3b Bond Begins Trading at NSE

Nairobi — Housing Finance's Sh3billion Bond Issue has been listed and is now trading at the Nairobi Securities Exchange (NSE).

The mortgage firm's recent Bond Issue raised over Sh5 billion against a target of Sh3 billion, representing a 78 percent over-subscription.

Housing Finance Managing Director Frank Ireri said they returned to the debt market for a second tranche of Sh3 billion bond to be used for onward lending to property developers and mortgage financing.

"We came to the market in October 2010 looking to raise Sh5 billion and we actually managed to raise Sh7 billion and took the whole amount. Two years later we came back to the market looking for the balance of Sh3 billion and that basically completes the Sh10 billion tranche we needed," said Ireri.

Speaking during the bell ringing ceremony at the NSE on Tuesday, Ireri said the funds will raise its involvement on the supply side of residential middle and lower income housing which will in turn create significant mortgage lending opportunities for the company.

Central Bank Governor Njuguna Ndung'u, who was the chief guest, called on mortgage firms to come up with products that will attract the many Kenyans who still fear taking mortgages.

"When I see houses coming up everywhere, I see a market myself; I see a demand and we have to be there to provide the solutions. We have to go to them (customers) and ask them where do we fit in and what do you want?" said Ndung'u.

He also says there is need for a specific research to be done to find out where most Kenyans are getting their funding for the increased growth in the real estate saying there are still few going the mortgage way.

During the first tranche issued in 2010, HF managed to raise Sh7 billion, representing a subscription of 140.6 percent.

Proceeds of the notes were used for various projects including provision of mortgage financing for existing and aspiring home owners; supply of residential middle and lower income housing through partnerships and joint ventures and construction financing for all kind of property developers by becoming the first port of call for any property developers.

HF is currently optimising its existing branch network and those from Postbank after a recent partnership, to boost its mortgage sales.

The mortgage financier is targeting the lower and middle income segments of the market where there is an acute housing shortage.

The demand for housing in the country is estimated at over 200,000 units per annum with supply estimated at approximately 50,000 units, with demand highest in the low to middle class.

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