London, 26 May 2026 – The African Local Currency Bond Fund (“ALCB Fund”), managed by Cygnum Capital, has invested KES 624 million (USD 4.8 million) in a KES 3.0 billion (USD 23.2 million) bond issuance by the Kenya Mortgage Refinance Company PLC (“KMRC”) under its KES 10.5 billion Medium Term Note Programme (MTN) approved by the Capital Markets Authority in 2022. The issuance was structured as a Sustainability Bond, supporting the continued development of Kenya’s domestic capital markets and the expansion of affordable housing finance. This marks the first thematic bond issued by KMRC, following its inaugural KES 1.4 billion bond issued in 2022.
The bond’s proceeds will be used to refinance eligible green and social mortgage loans in line with KMRC’s Sustainable Finance Framework. Through its refinancing model, KMRC provides long-term local currency funding to primary mortgage lenders, supporting the expansion of affordable housing finance in Kenya.
The 8-year, Kenya Shilling-denominated bond, with a 5.1-year amortizing tenor was arranged by NCBA Investment Bank Limited and was listed on the Nairobi Securities Exchange on May 25, 2026. The issuance was oversubscribed, underscoring the strong appetite among both domestic investors and development finance institutions for impact-aligned instruments in Kenya’s local market.
The investment benefitted from subsidized currency hedging provided through the Currency Exchange Fund (TCX) under the EU Market Creation Facility, funded by the European Commission under the European Fund for Sustainable Development Plus (EFSD+). The facility helps reduce the cost of hedging local currency exposures, mitigating foreign exchange risk and facilitating foreign participation in domestic capital markets in emerging markets.
Fola Pedro, Transaction Lead at the ALCB Fund (Cygnum Capital), commented: “We are delighted to continue our support for KMRC through participation in its first Sustainability Bond issuance. The transaction strengthens KMRC’s capacity to extend vital, long-term funding to primary mortgage lenders, supporting the expansion of affordable housing in Kenya. It also marks an important milestone for KMRC and reflects the continued development of Kenya’s local currency bond market, alongside KMRC’s prior issuance of a 7-year bond, with participation from a broad range of institutional investors.”
Johnstone Oltetia, Chief Executive Officer of KMRC, said: “We are pleased to have issued KES 3.0 billion under Tranche 2, Kenya’s first Sustainability Bond in the domestic capital markets, aligning long-term capital with housing affordability and sustainability. Building on our 2022 inaugural bond, this eight-year Sustainability Note, with a 5.1-year amortizing profile, extends tenor and addresses structural liquidity constraints in housing finance. The longer tenor and amortizing structure enable banks and SACCOs to manage asset–liability mismatches and deliver more affordable, longer-tenor mortgages. This instrument deepens capital markets and expands access to affordable, green and social home loans.”
Ruurd Brouwer, Chief Executive Officer of TCX, said: “ Long term fixed rate home loans are a game changer for Kenya. They allow families to plan their finances with certainty, make home ownership more accessible, and build a more inclusive and resilient housing finance system. Thanks to the European Commission - TCX Market Creation Facility, we could support the ALCBF and KMRC to realize a successful issuance of a sustainability bond. The transaction brought foreign institutional investors into the Keyan housing finance market, enabled by TCX its' ability to remove the currency risk. The transaction makes homeownership more accessible for Kenyan families. A great achievement!”
ENDS
ALCB Fund: The African Local Currency Bond (“ALCB”) Fund is a dedicated investment vehicle that supports African local currency bond issuances to promote capital market development. It acts as an anchor investor in bond issuances by financial institutions, corporates, and impact-driven enterprises across Africa, enabling them to raise long-term local currency financing and reduce FX risk.
The Fund was established in 2012 by KfW, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and is managed by Cygnum Capital. The Fund also benefits from support from several development finance institutions, institutional investors, and impact investors, including FSD Africa Investments as an additional shareholder. Learn more: www.alcbfund.com
KMRC: The Kenya Mortgage Refinance Company (KMRC) is a public limited company established under the Companies Act, 2015 and licensed by the Central Bank of Kenya (CBK) as a financial institution under the Central Bank Act, and the Capital Markets Authority (CMA) as an issuer of securities to the public. KMRC's mandate is to sustainably promote homeownership through refinancing. As a wholesale financial institution KMRC provides, through primary mortgage lenders (banks and SACCOs), single-digit, fixed-rate home loans with repayment periods of up to 25 years. Learn more: www.kmrc.co.ke
Cygnum Capital Group: Cygnum Capital is a specialist investment bank and asset manager focused on frontier and emerging markets. Since 2008, the firm has delivered innovative, impact-driven financial solutions tailored to the evolving needs of its clients, with a global footprint and deep regional expertise. Learn more: www.cygnumcapital.com
TCX: TCX is a development finance initiative backed by a shareholder base that includes FMO, EBRD, KfW and IFC, as well as the European Commission and Dutch, Swiss, British, French, and German governments and other DFIs and microfinance vehicles. TCX protects borrowers in emerging and frontier markets from currency risk by facilitating currency hedges that transfer the risk to TCX's balance sheet. TCX offers derivative instruments – cross-currency swaps and FX forwards – in currencies not or insufficiently covered by commercial parties. Since starting operations in 2007, TCX has hedged a total volume of nearly USD 21 billion in development loans across 71 currencies. Learn more: www.tcxfund.com.
