Shelter Afrique Targets Ksh 56 Billion In A Planned Bond Issuance

Shelter Afrique has announced plans to issue a bond in East Africa, in the Kenyan Capital Market through the NSE and aims to raise 56.9 billion shillings.

The funds raised from the bond will be used to finance upcoming affordable housing projects within East Africa with a keen eye on the Kenyan market.

The firm’s decision to float the bond comes after the Kenya Mortgage Refinance Company got the green light from the Capital Markets Authority (CMA) to float its first-ever bond aimed at raising Kshs 10.5 bn through Medium Term Notes (MTN).

Once issued, Shelter Afrique’s bond will be the third affordable housing bond to be floated in less than a year after the Capital Markets Authority (CMA) approving the issuance of a 3.9 billion shillings Medium Term Note (MTN) program for Urban Housing Renewal Development Limited (UHRD) in November 2021.

The UHRD bond which has a Kshs 600.0 mn green-shoe option with an 18-month tenor and an interest rate of 11.0 percent is expected to finance the construction of the ongoing Pangani Affordable Housing Project.

The planned issuance of the East African bond by Shelter Afrique is an indication that developers have continued to explore diversified sources of financing for their Real Estate projects.

Bonds are a source of debt capital for businesses that are well established and need funds for the long-term growth of the business.

The company can raise funds by selling bonds to different investors and sharing profits from the projects for which bonds are issued.

Currently, approximately 99.0 percent of business funding in Kenya is sourced from banks compared to approximately 1.0% from the capital markets, according to World Bank mainly due to underdevelopment of the latter.

Read More: Shelter Afrique Signs US$11m Credit With BancABC