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KMRC eyes 2028 for third bond sale
Bell-ringing ceremony during the listing of Kenya Mortgage Refinance Company’s (KMRC) Sh3 billion second tranche sustainability bond at the Nairobi Securities Exchange on May 25, 2026. From left are Capital Markets Authority (CMA) director of market operations Daniel Warutere, KMRC chief executive Johnstone Oltetia, Treasury Cabinet Secretary John Mbadi, KMRC chairman Dr Haron Sirima and NCBA Group managing director John Gachora.
The Kenya Mortgage Refinance Company (KMRC) is targeting the third tranche of its medium-term corporate bond programme in 2028 after successfully raising Sh3 billion from the second issuance earlier this month.
The mortgage refinancing firm, which listed the second tranche bond on the Nairobi Securities Exchange (NSE) on Monday, is betting that interest rates will remain subdued, creating room for another issuance that could close out its medium-term notes (MTN) programme.
KMRC’s second tranche bond attracted Sh9.4 billion in bids against a target of Sh3 billion, representing an oversubscription rate of 312.8 percent. The issue was open between April 28 and May 12.
The successful issuance brings KMRC’s total proceeds from the MTN programme to Sh4.4 billion, following the Sh1.4 billion raised in the first tranche in 2022.
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KMRC postponed the second tranche in 2024 and 2025 after interest rates rose to levels it deemed prohibitively high.
“The third tranche is coming after next year in 2028. But it’s all obviously subject to market conditions because our circumstances are very clear to us. It’s about affordability,” said KMRC chief executive officer Johnstone Oltetia.
The second tranche is KMRC’s inaugural green bond, with an eight-year tenure priced at 12.2 percent.
The terms of the latest corporate bond are more favourable for KMRC from a funding cost perspective, with the longer-dated paper priced below the first Sh1.4 billion tranche, which was priced at 12.5 percent despite a shorter seven-year tenure.
KMRC launched the MTN programme in 2022 with a target of raising Sh10.5 billion over four years to support its core role of providing long-term concessional financing to primary lenders, including banks and Saccos, to support affordable mortgage lending to households.
Green push
The company, partly owned by banks and the National Treasury, said it expects to complete the programme in one or two additional tranches.
KMRC blends proceeds from bond issuances with concessional loans from the World Bank and the African Development Bank (AfDB) to support home mortgages at concessional single-digit rates.
The latest tranche will finance green buildings designed to use sustainable materials, improve energy efficiency and reduce water consumption to minimise environmental impact.
The firm said investors in the bond will enjoy tax-free returns after the Kenya Revenue Authority (KRA) affirmed the paper’s classification as a green or sustainable bond.
“As far as the law is concerned, both from a regulatory perspective and even tax laws, it qualifies for tax exemption. But we had to confirm from KRA that this is also their understanding. So, it is still considered tax exempt,” added Mr Oltetia.
The latest proceeds will expand KMRC’s loan book. The firm said it had refinanced Sh29.99 billion as of April 2026, supporting 5,811 end-borrowers across 39 counties.
KMRC is among firms taking advantage of the lower interest rate environment to tap the corporate bond market.
This includes East African Breweries Plc (EABL), which raised Sh16.76 billion through a five-year non-sustainability-linked corporate bond in November 2025.
Other recent issuers include Safaricom, which raised Sh19.99 billion from the opening tranche of its green bond in December, and I&M Bank, which raised Sh13 billion this month.
