NAIROBI, July 17 Kenyan mortgage firm Housing
Finance will raise additional capital in the next two years
after it delayed its plans to issue a corporate bond due to high
interest rates on offer, its chief executive said on Thursday.
Housing Finance said this week it was forced to postpone its
planned offering of a 20 billion shillings ($228.18 million)
corporate bond after the yield on Kenya's benchmark 91-day
Treasury bills rose to 11.438 percent at the end of June.
Interest rates went up on the back of increased borrowing by
the government last month, dashing hopes that Kenya's debut
Eurobond - which offers a yield of less than 7 percent - would
lead to an overall fall in borrowing rates for Kenyan companies.
"The bond is not the only form (of capital-raising) and we
are not constrained. We are comfortably funded," CEO Frank Ireri
The company, which held a successful cash call in 2010,
sought shareholder approval in April to increase its authorised
share capital, a possible hint as to how it plans to raise money
next. Ireri, however, said the firm would look at all options.
"We will definitely be raising capital in one way or the
other," he said, adding this would follow an increase in capital
requirements for lenders by the central bank, which will kick in
at the start of next year.
In 2012, the central bank raised core capital requirements
for banks to 10.5 percent of assets from 8 percent, and total
capital to 14.5 percent from 12 percent, giving them two years
Ireri said Housing Finance was also counting on its drive to
boost its retail banking operation to mobilise deposits that can
be used to lend to customers.
The company is opening five new outlets and working on two
new products. It started offering current accounts and savings
accounts two years ago, diversifying from its focus on mortgage
Ireri said non-interest income, which surged 241 percent in
the first half to 506 million shillings, was likely to grow to
account for a bigger share of profit, thanks to demand for
insurance products and for new houses.
Housing Finance's non-interest income mainly comes from its
property development subsidiary and its insurance agency.
($1 = 87.6500 Kenyan Shillings)
(Reporting by Duncan Miriri; editing by Drazen Jorgic and Mark