Nairobi: January 08, 2013: The Nairobi based Pan African housing and urban development financier Shelter Afrique's Ksh500 million bond, the last tranche of a Ksh3 billion medium term note issue in 2011, has recorded a full subscription.
This offer, which follows a successful floating of the first tranche of Ksh2.5 billion in 2011, will attract a fixed rate of 12.5%, and is expected to mature on December 14th, 2015.
Announcing the results, Shelter Afrique Managing Director Alassane BÂ hailed the success of the bond, saying it demonstrated a robust local investor appetite for bonds and strong faith investors have in the company.
“We received a very positive response from the market and the bond was snapped up in record time. This positive market reception to our bond offering, the period notwithstanding, clearly demonstrates increased local investor confidence in Shelter Afrique’s long-term value proposition,” said BÂ.Mr.BÂ noted that the funds raised through the first tranche had been substantially utilized to finance projects in Nairobi, Mombasa and Kisumu.
“Ten projects at an estimated cost of Ksh9.4 billion have been funded with proceeds of the first tranche. Proceeds from this last tranche will be used to fund already approved projects in Nairobi and Mombasa”
Medium to long term funding
Mr. BÂ said the issuance of the bond also reflects the company’s desire to focus on medium to long-term funding solutions for the provision of affordable and adequate housing in Kenya adding that poor planning, lack of finance, high cost of infrastructure development and that of building materials remain major challenges to the provision of decent housing in the country.
“There is a growing need for viable and adapted options for funding housing development, against the backdrop of a growing demand for housing that surpasses supply. With an estimated annual demand of 150,000 housing units in Kenya against a supply of less than 35,000 the demand for decent housing is enormous,” said Mr. BÂ.
Mr. BÂ said the need for affordable housing in Africa must be urgently addressed, adding that failure to do so will not only result in the continued growth of slums and a deteriorating standard of living for the majority of Africa’s urban dwellers, but also hinder the continent’s efforts to create the broad-based economic growth required to reduce poverty.
“Shelter Afrique, as the foremost housing finance and development institution in Africa is keen on working closely with key stakeholders to find a solution to the low income housing problems facing the people of Africa specifically with the aim of designing successful social housing programs which will lead to increased supply of affordable houses on the continent,” he said.
With four previous bonds issued and fully subscribed, the Shelter Afrique is one of the most prolific corporate debt issuers in the Kenyan market. The company has financed the implementation of more than 100 projects in the country, amounting to about Ksh11.6 billion (US$135 million).
The new bond began trading at the Nairobi Security Exchange on January 2nd, 2013.