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KMRC prices green bond at 12.2pc, eyes tax-free sweetener
KMRC will be going to market with the second tranche of its Sh10.5 billion bond programme, coming four years after its debut issuance in February 2022.
The Kenya Mortgage Refinancing Company (KMRC) has offered a fixed interest rate of 12.2 percent per annum for an eight-year term for its green bond that targets to raise Sh3 billion, even as it hopes for a tax exemption.
KMRC is seeking to ride on the precedent of Safaricom Plc, which raised Sh40 billion in November 2025 through a sustainability-linked bond at a coupon of 10.4 percent, drawing bids worth Sh41.86 billion, translating to an oversubscription of 177 percent against the Sh15 billion target.
The mortgage refinancer states that, whereas it is confident that the Income Tax Act renders its bond eligible for tax exemption, it is still awaiting confirmation from the Kenya Revenue Authority (KRA).
“As provided in Paragraph 60 of the First Schedule of the Income Tax Act, interest income accruing from all listed bonds, notes, or other similar securities used to raise funds for infrastructure, projects, and assets defined under Green Bonds Standards and Guidelines is tax exempt, provided such bonds shall have a maturity of at least three years,” KMRC’s pricing supplement for the green bond states.
“For certainty, KMRC is seeking formal confirmation from Kenya Revenue Authority and the tax treatment is therefore subject to KRA’s confirmation,” it added.
Market return
KMRC floated its debut sustainability-linked bond on April 28, 2026, with a target to raise Sh3 billion, marking the second green-debt issuance in the capital markets just four months after Safaricom listed a record Sh40 billion one on December 16, 2025.
This is the second tranche of KMRC’s Sh10.5 billion bond programme, coming four years after its debut issuance in February 2022, during which it raised Sh1.4 billion through its inaugural corporate bond that attracted 480 percent oversubscription.
The mortgage refinancer has floated an eight-year tenured note with a 5.1-year average weighted life, implying that noteholders will have the principal amount paid down gradually as opposed to a bullet payment at maturity.
Proceeds from the sustainability note are expected to boost KMRC’s loan book, which closed 2025 at Sh19.6 billion, having grown from Sh11.9 billion in 2024.
“One hundred percent of the net proceeds will be allocated to refinancing eligible green home loans and eligible social home loans as defined in KMRC’s Sustainable Finance Framework dated March 2026. Bond proceeds will be used alongside other concessionary funding at KMRC’s disposal,” KMRC says in a note to investors.
Offer details
The offer period of the Sh3 billion note will run between April 28, 2026, and May 12, 2026, with a minimum investment of Sh100,000.
Results announcement and allotment are slated for May 15, 2026, while listing and commencement of trading at the Nairobi Securities Exchange (NSE) are earmarked for May 25.
The company had planned to return to the capital markets in 2024 but was held back by a high-interest-rate environment that would have translated into a higher cost of funds and undermined its agenda of pushing affordable mortgages downstream.
East African Breweries Plc, in November 2025, also took advantage of the lower interest-rate environment and raised Sh16.76 billion in a five-year non-sustainability-linked corporate bond issuance with the coupon set at 11.8 percent.
In the year ended December 2025, KMRC’s net earnings stood at Sh1.0 billion, having contracted marginally compared to Sh1.3 billion in 2024.
The mortgage refinancer’s performance was impacted by a decline in net interest income from Sh2.2 billion to Sh1.7 billion, while its expenses grew to Sh370.9 million from Sh341.2 million in 2024.
The lead arranger and placing agent of KMRC’s Sh3 billion note is NCBA Investment Bank, with Cygnum Capital and C&R Group serving as financial adviser and registrar, respectively.
KCB Kenya Ltd is the designated receiving bank, while Ropat Trust and Mboya Wangong’u & Waiyaki are the note trustee and legal counsel, respectively.
