HF Group’s banking subsidiary HFC is set to redeem in full its first tranche Medium Term Note (MTN) upon maturity.
In 2010, the company raised 7,030,900,000 shillings under the 7 year Medium Term Note (MTN) whose program size was 10,000,000,000 shillings. The total notes on a fixed rate of 8.5 percent per annum amount to 5,865,400,000 shillings while the total notes on floating rate are 1,165,500,000 shillings. The floating rate notes were by a margin of 3 percent plus 182 day Treasury bill rate of the last auction immediately preceding the interest payment date subject to a minimum of 5 percent per annum and a maximum of 9.5 percent per annum.
The bond repayment was financed through a mixture of internally generated funds and debt refinancing. In the current year, HFC raised Kshs. 4.5b equivalent from international financiers, part of which has gone towards refinancing the bond settlement.
In 2009 just before the bond was issued the bank’s loan book stood at Kshs15 billion and by end of 2016, the loan book had grown to 54 billion shillings, a 360 percent growth. Profitability improved from 351 million shillings in 2009 to 1.365 billion shillings in 2016, a 390 percent growth. The full repayment of the bond despite the prevailing macro environment is a demonstration of the Group’s strength.
“From a strategic perspective we were able to provide SMEs with working capital, project financing as well as investment in large-scale retail housing projects such as Precious Heights in Riruta and Kahawa Downs in Kahawa along the Thika Super Highway,” Mr. Sam Waweru, HFC Managing Director, said. “The actual instruments will vary depending on the target user and investors plus of course the prevailing market conditions. But it’s the Group’s intention to be able to issue some asset-backed securities in future to release liquidity held in the mortgage assets,” he added.