The Kenya Mortgage Refinance Company (KMRC) has successfully priced its latest green bond issuance at an interest rate of 12.2 percent per annum for an eight-year term, while simultaneously pursuing a tax-exempt status to enhance the instrument’s appeal to investors. The bond is targeted to raise KES 3 billion. The mortgage refinancer is seeking to ride on the precedent set by Safaricom Plc, which raised KES 40 billion in November 2025 through a sustainability-linked bond at a coupon of 10.4 percent, attracting bids worth KES 41.86 billion and achieving an oversubscription of 177 percent against its KES 15 billion target.
While KMRC is confident that the Income Tax Act renders its bond eligible for tax exemption, it is still awaiting formal confirmation from the Kenya Revenue Authority (KRA). As provided in Paragraph 60 of the First Schedule of the Income Tax Act, interest income accruing from all listed bonds, notes, or other similar securities used to raise funds for infrastructure projects and assets defined under Green Bonds Standards and Guidelines is tax exempt, provided such bonds have a maturity of at least three years.
KMRC Follows Safaricom’s Lead
KMRC floated its debut sustainability-linked bond on April 28, 2026, marking the second green-debt issuance in the capital markets just four months after Safaricom listed its record KES 40 billion bond on December 16, 2025. This issuance represents the second tranche of KMRC’s KES 10.5 billion bond programmes, coming four years after its debut corporate bond in February 2022, during which it raised KES 1.4 billion and attracted a 480 percent oversubscription.
The mortgage refinancer has structured an eight-year tenured note with a 5.1-year average weighted life, implying that noteholders will have the principal amount paid down gradually as opposed to a bullet payment at maturity. Proceeds from the sustainability note are expected to boost KMRC’s loan book, which closed 2025 at KES 19.6 billion, having grown from KES 11.9 billion in 2024. According to KMRC, one hundred percent of the net proceeds will be allocated to refinancing eligible green home loans and eligible social home loans as defined in its Sustainable Finance Framework dated March 2026, and will be used alongside other concessionary funding at the company’s disposal.
The offer period for the KES 3 billion note will run from April 28, 2026, to May 12, 2026, with a minimum investment of Sh100,000. Results announcement and allotment are slated for May 15, 2026, while listing and commencement of trading at the Nairobi Securities Exchange (NSE) are earmarked for May 25, 2026. KMRC had originally planned to return to the capital markets in 2024 but was held back by a high-interest-rate environment that would have translated into a higher cost of funds and undermined its agenda of pushing affordable mortgages downstream.
KMRC’s net earnings stood at KES 1.0 billion, having contracted marginally compared to KES 1.3 billion in 2024. The mortgage refinancer’s performance was impacted by a decline in net interest income from KES 2.2 billion to KES 1.7 billion, while its expenses grew to KES 370.9 million from KES 341.2 million in 2024. Through this issuance, KMRC aims to demonstrate that green instruments can achieve commercial viability while advancing broader sustainability goals in Kenya’s housing finance sector.
