CMA Gives nod to HF’s 10Billion Medium Term Note



Nairobi August 30, 2010…The Capital Markets Authority (CMA) has approved the issue and listing of a Kshs 10 Billion Medium Term Note by Housing Finance. In a letter signed by the Authority’s Chief Executive Officer, Ms. Stella Kilonzo, the Regulator states its satisfaction with Housing Finance’s application and full disclosure of material information in accordance with the requirements of the Capital Markets Act. The good news follows an earlier nod from the Central Bank of Kenya which indicated no objection to the issuance of the medium note.  



The approval means that Kenya’s premiere mortgage financier can now embark on a Medium-term note (“MTN”) program that enables the company to offer debt securities on a regular and/or continuous basis.

According to HF’s Managing Director, Mr. Frank Ireri, the medium term note program is part of the plan to source long term funding to bolster its growth of business in form of mortgages and property financing.  “The approval and consequent listing will provide the requisite financial gearing to enable Housing Finance play an integral role in helping boost the available supply of units with a number of major projects already in the pipeline” He said. “In addition, he said, ‘we shall be playing an indirect role in the supply of these additional units by financing project developers sponsoring the initiatives”. He added. Contrary to earlier reports, the funds raised will not go towards the institutions’ capital but will form part of debt funding.

Adequate housing continues to be affected mainly by inadequate planning and serviced land.  The cost of land  remains high and is made complex by inadequate legislative framework.

The approval by the regulator is seen as a boost to Kenya’s market leader in the mortgage financing industry as it seeks to benefit from the growing demand for housing in urban and rural areas. The current demand is estimated at 150,000 units per annum with supply estimated at 35,000 units. With such a massive supply gap, the private sector is expected to play a critical role in meeting the shortage. Equally, there exists a huge funding gap as demonstrated by statistics from the Central Bank that show that lending by commercial banks and mortgage finance institutions to the sector as at the end of 2009 was KES 9.2bn while the private sector approvals to put up properties by the City Council in  the year 2009 was valued at KES 77.0bn