This archive report was first published on 15 August 2019.
On August 15, 2019, the Capital Markets Authority (CMA) gave the green light to Kenya's first green bond, a Sh5 billion issue by property developer Acorn Group and PE fund Helios to finance the construction of student hostels.
The bond, a fixed rate unlisted bond, is being issued as a private placement, targeting sophisticated investors only. As a result, the tenor and coupon of the bond were not disclosed in the CMA notice.
Acorn and Helios aim to build up to 3,800 university hostel units in Nairobi at a cost of approximately Sh7.4 billion. They have already constructed over 1,000 units in Ruaraka, Jogoo Road, and Parklands under the Qwetu brand.
According to the CMA notice, the green bond is structured as a restricted public offer for sophisticated investors and seeks to raise Sh5 billion to finance sustainable and climate-resilient student accommodation.
GuarantCo has provided a partial guarantee for the bond, which will allow investors to recover up to 50 percent of their principal and interest in case of a default. This guarantee has led to the Acorn bond receiving a risk rating of B1 Stable from global ratings agency Moody's, one rung higher than Kenya's sovereign rating of B2 stable.
