KMRC CEO on second tranche of medium-term note and green housing projects

This blended financing approach enables KMRC to enhance affordability for end-borrowers while maintaining financial sustainability. As of April 2026, KMRC had refinanced Sh29.99 billion, supporting 5,811 end-borrowers across 39 counties.

Notably, 48 percent of loans have been extended to women and women-led households, underscoring KMRC’s commitment to promoting inclusive access to housing finance and addressing gender disparities within the housing sector.

The Sh3 billion second tranche issuance builds on the strong foundation established by the inaugural Sh1.4 billion tranche issued in 2022. The second tranche is structured as a sustainability note, with proceeds explicitly earmarked for eligible green and social home loans.

Give us more insight into the timing & pricing of the latest issuance. On the timing, some would argue it is a little inauspicious given that yields seem to have bottomed out, how do you respond to that?

On timing, we believe the current market window is favourable, indeed, more supportive than at any point in the past few years. Following 2022, the macro-economic environment became increasingly challenging for corporate issuers, characterised by elevated inflation and a tightening of monetary policy.

These conditions effectively crowded out private sector issuance, resulting in subdued corporate bond activity through 2023 and into early 2025.

However, the environment has since improved materially.

On pricing, we consider the 12.20 percent coupon on an 8-year amortising note, with a weighted average life of 5.10 years, to be competitive and reflective of the improved macroeconomic backdrop. By comparison, our 2022 issuance was a 7-year amortising bond, and this transaction represents a deliberate and gradual extension of tenor. This strategy aligns more closely with the maturity profile of the home loans we refinance, thereby enhancing asset-liability matching

Just like in the tranche issuance, the latest issuance has what appears to be a relatively aggressive amortisation schedule. Help us understand the thinking behind it.

The amortisation structure is consistent with our 2022 issuance. Coupon payments are made semi-annually, while a portion of the principal is repaid annually. This structure results in a weighted average life of approximately 5.1 years.

Importantly, this repayment profile closely mirrors the underlying cash flow characteristics of the home loans we refinance, where both principal and interest are amortised over the tenor of the loans.

This alignment enhances asset-liability matching and supports the overall risk management framework of the programme.

What does your pipeline of green housing look like from a quantum perspective?

We are seeing a growing pipeline of green housing projects, and through this issuance, we aim to actively influence the market towards the development and ownership of more energy- and water-efficient homes.

Such homes not only reduce the cost of living for homeowners through lower utility expenses but also contribute meaningfully to broader sustainability objectives. In parallel, KMRC is working closely with primary mortgage lenders (PMLs) and developers to help shape market practices in this direction.

Through these collaborations, we are encouraging the adoption of sustainable building standards and promoting increased supply and uptake of environmentally efficient housing solutions within the market.

What lessons have you learnt from the tranche I issuance that are helping shape the latest issuance?

First, structure and timing are critical. We have been deliberate in aligning the tenor of our issuances with the evolving maturity profile of the home loans we refinance. In this regard, the average tenor of refinanced home loans has increased significantly—from 8.3 years in 2021 to 13 years in 2025.

Our funding strategy is being progressively recalibrated to reflect this shift, with a clear move towards issuing longer-dated instruments that better support effective asset-liability matching.

Second, as an institution with a strong commitment to sustainability, we are equally intentional about catalysing broader market development. Beyond meeting our own funding needs, we aim to shape market practice and deepen the sustainable finance ecosystem.

It is within this context that KMRC is issuing a sustainability note—marking the first instrument of its kind in Kenya and setting an important precedent for future sustainable issuances in the domestic capital markets.

How far is KMRC with the risk sharing arrangement? What impact is that having in terms of mortgage disbursement?

The risk sharing facility (RSF) was capitalised in 2025 and is now fully operational. Primary mortgage lenders are currently in the process of reviewing and executing the Master Mortgage Guarantee Agreements, while also originating loan portfolios that meet the eligibility criteria for coverage under the facility.

As the RSF moves into its implementation phase, we expect it to play a meaningful role in de-risking mortgage lending and expanding access to housing finance. We will continue to provide updates on its deployment and the impact it is expected to generate across the housing market.

Give us a sense of where the concessional funding pool is?

Our funding strategy is centered on blending concessional financing with capital markets funding, enabling us to diversify our funding sources while preserving affordability for end-borrowers.

This approach allows KMRC to balance cost efficiency with scalability in meeting its mandate. Currently, we have two concessional funding lines—from the World Bank and the African Development Bank—which have been instrumental in supporting our liquidity provision to primary mortgage lenders. In parallel, we are actively exploring additional sources of concessional funding to further strengthen and diversify our funding base.