NMRC to launch second tranche N20bn bond issuance, Q3 2017

The Nigeria Mortgage Refinance Company (NMRC) will, within the third quarter of 2017 re-launch into the capital market with a second tranche bond issuance of N20bn to raise additional funds for housing refinancing.

This is coming almost a year since the refinancer planned a re-launch into the bond market but was constrained due to the country’s harsh macroeconomic environment.

The bond is the second tranche of the Series-1 of NMRC 15- year 14.9 per cent fixed rate under a N140 billion medium-term note programme due in 2030 and is part of government’s effort to finance the nation’s increasing housing deficit.

NMRC also plans to issue to issue some Sukkuk bonds of up to N2bn before the end of 2017, according to Charles Inyangete, the Company’s Chief Executive Officer.

The NMRC, after a successful, debut, N8bn bond showing in 2015 later announced it would go back to the market by the third quarter of 2016 for a second tranche bond issuance.

Inyangete confirmed that high inflation and interest rates have seriously delayed the planned N20bn bond issue, but that the company has now overcome those challenges.

“We are about to go to the market for the N20bn,” he stated.

 

“You need to have a conforming portfolio and today you may have heard that originating of mortgages is not as easy and straight forward because of the environment, though we are gradually overcoming the hurdles that has held down the speed of creating mortgages, we now also have a way of creating new mortgages through the warehouse fund,” he said, responding to BusinessDAY question on what could have dragged the planned second tranche of about 20 billion.

 

In 2015, the NMRC launched its first N8bn bond issue and was later listed on the FMDQ OTC platform in September same year to create long-term funding for mortgage financing.

Inyangete confirmed at the just concluded annual Housing conference in Abuja that the N8bn raised is already fully invested and that they are currently investing part of their own retained profit.

He specifically said that till date, NMRC has refinanced conforming mortgages of its member-banks in excess of N8.5 billion.

“We are about going to the market for a Sukkuk because we are making submission to the Securities and Exchange Commission (SEC). We are also going to the market for a bigger portfolio of mortgages, so all of these are what is going to drive the market going forward.”

“The Sukkuk is a small sized transaction in the order of about 2 billion or slightly less, the essence of it is to test the market for Sukkuk and have the processes and strategies properly set out.

 

He said one of their member banks has a Sukkuk portfolio which is not very large and that they are using that portfolio to go to the market. “So we have approval of “sharia boat free” so we are now just going through the Securities and Exchange Commission for their own approval.”

 

On increasing appetite for Sukkuk bonds, he explained, “It is a compliant instrument for those who don’t want to invest in products that are non-sharia compliant, the Sukkuk is an alternative.

 

“To have an Islamic product as part of our portfolio of products is very useful, it also respond to any masses desire to be included in the way we do our business that means to include a segment of the market that is looking for a non-interest product,” he added.

 

In his presentation, he said Nigeria needs N3.5 trillion is needed annually to provide for 700,000 housing deficits

 

“In fact some figures put it for as high 900,000 and so if you look at that it means the entire budget of the ministry of work, power and housing is way short of that expectation but again that is why we need the capital market and this is why we need to tie a product to the need.

 

“Those are some of the things that need to be done so that we can provide houses to meet the need of the people,” he explained.

 

He also said the NMRC collaborates with key stakeholders, including Mortgage Bankers Association of Nigeria (MBAN), Central Bank of Nigeria (CBN), National Bureau for Statistics, NMRC-Member Primary Mortgage Banks, among others to develop and implement key housing industry leverage to promote affordable housing.

 

He said the company, leveraging such partnerships has been able to develop initiatives like the Uniform Underwriting Standards (UUS), Mortgage and Foreclosure Law (MFL), Housing Mortgage Market Information Portal (HMIP),  Mortgage Market System (MMS). The company is also developing the Uniform Underwriting Standards for the Informal Sector.

 

ONYINYE NWACHUKWU, ABUJA