Capital Markets

Shelter Afrique repays debt fully, targets regional bonds

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Shelter Afrique CEO Andrew Chimphondah. PHOTO | POOL

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Summary

  • The loans, together with accrued interest, were owed to six development finance institutions (DFIs) and two commercial banks and had been restructured in 2018 to a new five-year tenor to run from June 2019 to June 2024.
  • The lender was at the time struggling with losses amid high financing costs, which negatively affected its ability to raise new capital and fund new projects.

Pan-African housing financier Shelter Afrique has completed the repayment of the balance of Sh20.5 billion ($186 million) owed to eight lenders three years ahead of schedule, paving the way for the firm to roll out its planned issuance of Sh137.8 billion ($1.25 billion) worth of new bonds from African capital markets.

The loans, together with accrued interest, were owed to six development finance institutions (DFIs) and two commercial banks and had been restructured in 2018 to a new five-year tenor to run from June 2019 to June 2024.

The lender was at the time struggling with losses amid high financing costs, which negatively affected its ability to raise new capital and fund new projects.

“Despite the debt restructuring agreement giving us a window to make full loan repayment by June 2024, we successfully repaid all the loans by June 2021,” said Shelter Afrique chief executive Andrew Chimphondah.

“This now affords us the ability to underwrite new business and debt without constraints and legacy matters…based on our current equity capital base of $155 million (Sh17 billion) and a debt-equity ratio of zero percent we can instantly raise new debt of up to $465 million (Sh51 billion).”

The debt settlement now means that the firm can go ahead and roll out its bond issuance plan, which was first announced earlier this year.

It will be seeking Sh55.1 billion ($500 million) from East Africa and a similar amount from Nigeria, with the remaining $250 million (Sh27.6 billion) coming from its francophone markets.

The East African tranche is likely to be issued in the Kenyan capital market, which has the necessary depth for issuance of such magnitude—and where the firm has floated bonds before.