The capital markets regulator has granted approval for the issuance of the country’s first-ever  Sukuk Bond to a property developer.

The Capital Markets Authority (CMA) has granted Linzi Finco Trust, the Issuer of this pioneering Sukuk-Linzi Sukuk permission to float the Ksh3 billion bond.

The bond, which offers an internal return of 11.13 percent, is set to raise KSh3 billion with the primary aim of developing 3,069 institutional housing units, in line with the government’s push for affordable housing.

Sukuk, also known as Islamic bonds, are financial instruments that comply with the Shari’ah principles, making them a unique and inclusive investment avenue.

CMA said the issuance marks a significant milestone in Kenya’s capital market diversification, providing both investors with an alternative, socially responsible investment opportunity.

The bonds will play a major role in the government’s affordable housing through the provision of cheap financing.

CMA said Sukuk will contribute significantly to expanding the availability of affordable housing and positively impact the lives of Kenyans.

This innovative financing mechanism is expected to attract both domestic and international investors seeking ethical and socially responsible investment options.

“We are thrilled to embark on this pioneering journey with the issuance of the first Sukuk bond. This financial initiative represents not only a new investment opportunity but also a significant step towards addressing the housing deficit in Kenya and supporting the Government’s transformative agenda,” said CMA chief executive officer Wyckliffe Shamiah.

The Sukuk bond issuance is anticipated to set a precedent for further innovative capital markets instruments in Kenya, demonstrating the Authority’s commitment to economic growth and development.

It also signifies CMA’s dedication to fostering an inclusive and diverse capital markets market that caters to a broader spectrum of investors.