DBN expands funding base with N100bn bond issuance

As part of plans to expand its funding base, the Development Bank of Nigeria (DBN) on Thursday signed a N20 billion, series one, under its N100 billion first domestic bond issuance programme.

The fund issued at 14.40 percent interest rate, is a medium-term bond issuance programme that would mature in 2028, and it was oversubscribed by N23 billion. It is targeted at supporting the growth of Micro Small and Medium Enterprises (MSMEs) sub-sector of the economy.

DLM Capital Group, an investment house, is the leading House and Standard Chartered Bank, is the joint issuing house. Other partners include G.Elias, Meristem, First City Monument Bank, Access Bank, Delloitte, Zenith Bank, Agusto&Co., GCR Ratings an affiliate of Moody’s Investors Service, Olaniwu Ajayi and ARM Trustees.

Speaking at the official signing ceremony in Lagos, Tony Okpanachi, managing director/CEO, DBN, said the bank was set up to provide wholesale funding for Micro Small and Medium Enterprises (MSMEs), through financial institutions.

“In the last six years, we have been doing that and the initial funding we have raised for DBN has come from our development partners. So we have mobilised capital funds from outside the shore of Nigeria. That was the first step. As an institution, going forward we will also be able to catalyse some fundraising within the economy itself to lend to the MSMEs. What we have done today with this our debut bond is N100 billion, but the first series is N20 billion (oversubscribed by N23bn). It will enable us to raise money locally, to be able to provide funding for MSMEs through our wholesale model,” he said.

Okpanachi said that the monies borrowed from the development partners would be paid back, just as the funds given to MSMEs would also be paid back because they are all loans.

“We looked at the track records, and we also hope to work with more partners. We are quite comfortable that they know the market and they have worked well with us and raised bonds for several organizations. As we raise more funds, we would work with more partners so the door is not closed to others,” he said.

Ijeoma Ozulumba, executive director and chief financial officer of DBN, said this is a way of building a structure or an institution where small businesses can actually be supported by way of having access to finance.

She added that the rates are affordable and that as the economy improves and interest rates moderate, it will also reflect on the instrument.

According to her, further issuances depend on the market conditions, the utilization of available funds and when shareholders and advisers give a go-ahead for that.