The Nigeria Mortgage Refinance Company (NMRC) has completed its N10 billion 7.20% Series 3 Fixed Rate Bond to boost funding for affordable mortgage in the country.
The bond, which was facilitated by DLM Capital Group as the Financial Adviser and Issuing House, has created opportunity to investors and home seekers in Nigeria.
According to the bond brochure, the net proceeds of the exercise will be used to refinance eligible mortgage loans originated by the participating mortgage lending banks, and investors.
The Managing Director/CEO of NMRC, Kehinde Ogundimu, explained that the bond was well received by investors, and was subscribed 3.28 times over the projected amount.
He said, “This has been described to be the highest subscription for a Nigerian bond so far.
“This series 3 bond issuance goes to further reinforce our commitment to encourage, promote and facilitate home-ownership in Nigeria. This issuance gives an opportunity for people like you and I to take mortgage loans at an affordable rate and buy houses.”
Ogundimu added that one of the biggest challenges in the mortgage industry is affordability, but with the rate at 7.20%, he expects that from the issuance, there will be a substantial decrease in the mortgage rate to the ultimate mortgagors going forward
“Other things like cost of houses is also expected to drop as this interest rate will offer some cost reduction to developers, unlike in the past where they had to borrow money for short periods at over 30% interest rate,” he added.
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What they are saying
Sonnie Ayere, the Group CEO, DLM Capital Group, explained that the success of the bond is an indication that it would go a long way in helping the average Nigerian access mortgages loans.
He said, “The bond which was aimed at ₦10billion was oversubscribed and we received commitments for ₦32.8billion, this I believe is the highest subscription for a Nigerian bond thus far. This indicates a strong investor appetite for the long-tenured asset and re-emphasises the market’s confidence in the operating model of NMRC.
“Also, we are cognizant of the housing situation in Nigeria and the challenges faced by Nigerians in accessing mortgage loans due to its high rates, so helping NMRC to achieve this gives us a sense of fulfilment as it will immensely help ordinary Nigerians access mortgage loans at low rates and ultimately help them buy their own homes.”
What you should know
NMRC was established to bridge the funding cost of residential mortgages and promote the availability as well as the affordability of good housing to Nigerians by providing increased liquidity in the mortgage market through the mortgage and commercial banks.
The company is driven by substantial private sector participation consisting of commercial banks, primary mortgage banks, insurance companies, private equity investors and international financial institutions through the Ministry of Finance with the public purpose of developing primary and secondary mortgage markets, and raising long-term funds from both domestic capital market and foreign markets to provide accessible and affordable housing in Nigeria.