Kenya Mortgage Refinance Company (KMRC) is scheduled to return to the market with a sustainability-linked bond sale in April, in what will be the second green debt issuance in four months after Safaricom’s Sh40 billion bond listed on December 16, 2025.
A sustainability-linked bond refers to debt whose proceeds are exclusively earmarked for environmentally friendly projects.
Once the funds are raised, drawdown by the issuer is tied to the achievement of environmental and climate-friendly milestones, ensuring the proceeds are used for the prescribed green initiatives.
The Business Daily has established that plans are at an advanced stage for KMRC to tap the market again, four years after its debut issuance in February 2022. The lender raised Sh1.4 billion through its inaugural corporate bond, which attracted a 480 percent oversubscription.
KMRC will be returning to the market for fresh commercial financing after exhausting the Sh1.4 billion raised in 2022, which it blended with cheaper funding from development finance institutions.
The company had initially planned to return to the capital markets in 2024 but was deterred by a high interest rate environment that would have raised the cost of funds and undermined its push to deliver affordable mortgages.
The quantum of the planned raise, tenure and pricing are yet to be finalised. However, KMRC is banking on the current low interest rate environment to unlock cheaper capital market financing and support growing demand for green-certified construction across major urban centres.
KMRC is also relying on the tax-free incentive attached to sustainability-linked bonds to attract a wider pool of investors and mobilise financing at relatively lower cost.
In November 2025, Safaricom raised Sh40 billion through a similar debt instrument at a coupon of 10.4 percent, drawing bids worth Sh41.86 billion, translating to 177 percent oversubscription against the Sh15.0 billion target.
During the same month, East African Breweries Plc (EABL) tapped the market with a five-year standard corporate bond, raising Sh16.76 billion at a coupon of 11.8 percent.
Over the last 16 months, the Central Bank of Kenya has cut its benchmark rate by 2.5 percentage points to 8.75 percent, triggering a steady decline in market interest rates.
The yield on the 91-day Treasury bill has fallen from 9.63 percent to 7.57 percent. The 182-day and 364-day papers have also declined from 10.03 percent to 7.82 percent and from 11.33 percent to 8.64 percent, respectively.
For the half-year ended June 2025, KMRC reported a net profit of Sh544.32 million, down from Sh559.42 million recorded a year earlier.
The company’s loan book closed the period at Sh18.78 billion, up from Sh11.89 billion a year earlier.
According to its latest filings, KMRC has refinanced a total of 3,855 mortgages.
KMRC’s planned issuance will be Kenya’s third sustainability-linked bond after Safaricom’s 2025 offer and student accommodation developer Acorn Holdings, which raised Sh4.3 billion in October 2019.
