NMRC N11bn series II Bond records 200% over subscription

As part of its primary mandate of providing liquidity to the Nigerian mortgage market, Nigeria Mortgage Refinance Company (NMRC) recently completed its N11billion 13.80 percent Series 2 Bond Issuance under its N440 billion Medium Term Note Programme. The net proceeds will be used to refinance eligible mortgage loans originated by the participating mortgage lending banks. This is coming on the heels of its inaugural N8 billion 14.9 percent Series 1 Bond issue in July 2015 – which was fully deployed towards refinancing legacy mortgage loan portfolios of the participating eligible member-mortgage lending banks.

The Series 2 Bonds are unconditionally and irrevocably guaranteed by the Federal Government of Nigeria (FGN) and thus ascribed an “AAA” rating by both Global Credit Rating Co. and Agusto & Co. The order book was subscribed by over 200 percent. The bonds were subscribed to by domestic investors with the Pension Fund Administrators (PFAs) representing over 70 percent of the investors. The bonds were priced at a spread of c.74 basis points above the interpolated 15-year FGN yield of 13.06 percent as at the opening of book building.

According to the current Managing Director of NMRC, Kehinde Ogundimu, “The Bond Issuance reinforces our commitment to encourage and promote homeownership in Nigeria by linking the capital markets with the housing sector and establishing an operating and viable secondary mortgage market to support the primary mortgage market.” He added that NMRC remains committed to transmitting the full benefit of the pricing efficiency achieved in its funding cost to home borrowers through the participating primary mortgage lenders, thereby lowering costs and driving activities that will deepen the mortgage market.

Sonnie Ayere, chairman of Dunn Loren Merrifield Advisory Partners, stated that the high subscription level for the Series 2 bonds is indicative of the strong investor appetite for the long-tenured asset class and underscores the confidence reposed in the underlying principle and operating model of NMRC. He further noted that the Nigerian mortgage market will witness a significant boost as the mortgage pre-financing facility, Mortgage Warehouse Funding Limited (MWFL) kicks off its operations. “MWFL is sponsored by NMRC, Member Mortgage Banks, Mortgage Bankers Association of Nigeria, Lion’s head of Global Partners through the African Local Currency Bond Fund and DLM Group”, he added.

Funso Akere, chief executive of Stanbic IBTC Capital Limited commended the management of NMRC for giving the Issuing Houses a free hand to guide the process. “The success of the bond reaffirms the availability of long-term funding to support NMRC’s drive to promote affordable housing ownership in Nigeria. Stanbic IBTC Capital is delighted to have supported NMRC in achieving this successful bond issuance”.

NMRC is licensed by the CBN to conduct mortgage refinancing business in Nigeria. The company is a private-sector driven company with the public purpose of developing the primary and secondary mortgage markets by raising long-term funds from the capital markets and thereby encouraging and promoting home ownership in Nigeria.

Dunn Loren Merrifield Advisory Partners acted as the Lead Issuing House and Lead BookRunner whilst Stanbic IBTC Capital acted as the co-Issuing House/Bookrunner on the transaction.