Capital Markets

KMRC eyes Sh17bn more for mortgages


KMRC chief executive Johnstone Oltetia. PHOTO | DIANA NGILA | NMG

The Kenya Mortgage Refinance Company (KMRC) retains an option to take an additional Sh15 billion loan from the National Treasury for onward lending to mortgage lenders, filings show.

The firm’s annual report for 2020 shows that it drew down Sh3.7 billion from an Sh18.82 billion loan facility made available by the Treasury, which is in form of on-lending from a credit facility the government took up from the World Bank in December 2019.

The company uses the funds to provide mortgage refinancing and technical assistance to eligible participating financial institutions. By June 2021, it had refinanced 1,400 mortgages valued at Sh2.76 billion from four institutions.

“Borrowings from the government amounted to Sh3.7 billion (2019: nil) as at the reporting date…At the year-end, the company had Sh15.12 billion of undrawn facilities which it may utilise to fund its obligations,” said the company.

The government charges interest on the loan at a rate of 4.5 percent per annum, meaning that KMRC was due to pay the Treasury Sh166.6 million in interest in 2020. The company disclosed however that Sh22.4 million remained unpaid at the end of the period.

“These amounts shall be accrued over the grace period/disbursement period (and) will be capitalised on the first principal repayment date and the management expects to meet all contractual obligations in the future,” said the KMRC.

“The company shall repay to the government the principal amount of the loan in 40 equal semi-annual instalments each year commencing on March 30, 2024, and ending September 30, 2043.”

In addition to the State loan facility, KMRC has also been eyeing a bond issuance to raise up to Sh10 billion to bulk up its lending capacity.

It had earlier expressed intention to float the paper by the end of last year, but did not do so and had not responded to queries on the bond plan by the time of going to press.

The move to tap additional capital came as the company widened its backing of mortgage lenders in the second half of 2021. By November, KMRC was processing Sh6.2 billion worth of loans to cover about 4,000 mortgages from 11 lenders.

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