NAIROBI, Kenya
Nairobi-based Pan African housing and urban development financier Shelter Afrique, today launched a Ksh3.5 billion five-year bond with a greenshoe option of up to Ksh1. 5 billion. The issue is the first tranche of a Ksh8 billion medium term note issue, which will be used to fund a number of housing projects across the country.
The bond offers both fixed and floating rates that will be based on the five-year T-bond plus a margin and 182-day T-bill plus margin, respectively. With five previous bonds, the financier is one of the more prolific corporate debt issuers in the Kenyan market.
“The positive market reception to our past bond offerings has been quite encouraging and clearly demonstrates increased local investor confidence in Shelter Afrique’s long-term value proposition,” said Shelter Afrique Managing Director Alassane BÂ, adding that projects to benefit from the issue have already been identified.
“There are 10 residential development projects with an estimated project cost of Ksh9bn in Kenya that will be financed from the proceeds of the bond notes issued,” said Mr. BÂ.
He said the issuance of the bond also reflects the company’s desire to focus on 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 decent housing in the country.
“There is a growing need for viable options for funding housing development, against the backdrop of a growing demand for housing that surpasses supply. With an estimated annual demand of 120,000 housing units in Kenya against a supply of less than 35,000 the demand for decent housing is enormous,” said Mr. BÂ.
CfC Stanbic Bank and its financial services arm SBG Securities are the joint arrangers. The Bank’s Regional Head of Investment, Anne Aliker, said Shelter Afrique’s history in the bond market coupled with the increasing demand for decent housing in Kenya, had made the company’s bond a compelling investment opportunity for both institutional and individual investors.
“We believe that it will be snapped up since this is not be the first time Shelter Afrique will be going to the market, having successfully raised funding in all its previous bond issues. Through these the company has managed to build trust over time, putting it in an advantageous position,” Ms. Aliker added.
Shelter Afrique has extended about Ksh8 billion in credits to private developers in the local real estate market over the last 10 years. The Ksh3.5 billion bond will be the sixth issued by Shelter Afrique since 2000. The company also floated bonds in 2000, 2006, 2009, 2011 and 2012, which has raised over USD55 million.
The offer closes on September 20th, 2013 at 5pm.
Afrique Shelter-Afrique is a pan African housing finance and development institution established by African governments to address the need for sustainable housing delivery system and related infrastructure projects in Africa. Shareholders include 44 African countries, the African Development Bank, and the African Re-Insurance Corporation. The company’s mandate is to provide financing by way of debt, quasi-equity and equity to both public and private institutions for housing and urban infrastructure projects in its member countries.
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