KCB to Launch Sh100 Billion First Tranche of Sh300 Billion Bond in October

KCB Group has announced plans to issue the first tranche of its Sh300 billion medium-term note (MTN) programme by October 2026, targeting to raise Sh100 billion. This marks the beginning of what would be Kenya's largest corporate debt issuance if approved by regulators.

The five-year MTN programme aims to mobilise capital through debt instruments typically maturing between five to ten years, offering a balance between short- and long-term debt options. KCB intends to list the initial tranche on the Nairobi Securities Exchange (NSE) in November, which would increase the total value of corporate bonds on the exchange to approximately Sh205.3 billion.

Dual Currency Issuance and Sustainability Focus

KCB plans to issue the bonds in both Kenyan shillings and US dollars, with a currency split expected to be either 50:50 or 60:40, depending on market conditions. The programme will include green, blue, and sustainability bonds, directing proceeds towards environmentally friendly and socially impactful projects.

Green bond projects will cover renewable energy (solar, wind, hydro, geothermal), energy efficiency, green buildings, clean transportation, sustainable forestry, waste management, and water-related initiatives.

Blue bonds will finance sustainable use of marine and freshwater resources, including sustainable fisheries, aquaculture, low-emission maritime transport, and water quality infrastructure.

Sustainability bonds will support a combination of green and social projects, such as affordable housing aligned with Kenya's Affordable Housing Programme, developer loans for green-certified affordable housing, refinancing through Kenya Mortgage Refinance Company (KMRC), and support for micro, small, and medium enterprises led by women and youth.

Strategic Importance and Market Context

KCB Group CEO Paul Russo emphasized that the Sh300 billion target is achievable, citing the advantage of splitting issuance between local and foreign currencies. He described the sustainability bond framework as a continuation of KCB's two decades of work in innovative financing that drives economic and social impact.

Demand for corporate bonds in Kenya has strengthened recently, with Safaricom's green bond receiving bids worth Sh41 billion against a Sh15 billion target, and KMRC's sustainability-linked bond attracting Sh9 billion in bids against a Sh3 billion target. This renewed interest follows a period of low corporate bond issuance after defaults by Chase Bank and Imperial Bank eroded investor confidence.

Since 2022, KCB has disbursed over Sh187 billion in green loans, including nearly Sh49 billion last year, supporting projects in renewable energy, sustainable agriculture, green buildings, clean transportation, water management, and climate-smart investments.