NMRC’s N10bn bond raises hope for liquidity in primary mortgage market

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Hope is in the horizon for liquidity in the primary mortgage market in Nigeria as the Nigerian Mortgage Refinance Company Plc (NMRC), on Friday at the FMDQ Securities Exchange, listed its Series 3 N10.00 billion Fixed Rate Bond under its N440.00 billion Bond Issuance Programme.

NMRC is not new to the domestic capital market, having visited the exchange before to raise funds which, as at December 2018 totalled N19 billion that was used to refinance mortgages raised by the primary mortgage banks (PMBs) and other mortgage institutions.

Kehinde Ogundimu, NMRC’s CEO, disclosed in statement in Abuja that NMRC refinanced mortgage loans totalling N18 billion as at December 2018.

The company had raised a total of N19 billion from the capital market to refinance mortgage loans that are provided by mortgage and commercial banks that it partners with. It raised N8 billion in July 2015 and N11 billion in June 2018.

Ogundimu explained that it was in line with the company’s mandate to promote affordable home ownership in the country by leveraging funding from the capital market to deepen liquidity in the primary and secondary mortgage markets.

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Expectation is that the present move will bring vibrancy to the largely illiquid PMBs and, by extension, to affordable housing delivery in Nigeria where the housing market has little or nothing to offer low income home-seekers, especially those of the working class.

“The proceeds of the issue would be used to refinance existing and conforming mortgage loans; this issuance demonstrates NMRC’s commitment to the provision of affordable liquidity to the mortgage market by attracting long-term funding into the housing finance industry from the capital markets the Ogundimu explained.

He noted that the prevailing interest rate regime would reduce the rate at which the primary mortgage institutions on-lend to their customers and, in the long-term, substantially drive reduction in mortgage interest rates as well as translate to cost reductions in housing construction finance going forward.

NMRC was just one of a host of other corporate organizations including Total Nigeria Plc, Valency Agro Nigeria Limited, Mixta Real Estate Plc and Flour Mills of Nigeria Plc who were responding to the sustained disruptions occasioned by the impact of the COVID-19 pandemic to businesses and economies by approaching the capital market for succor.

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The capital market has, increasingly, continued to provide the much-needed succor for corporate entities looking to raise funds to meet shortfalls in their working capital needs as well as capital expenditures.

The coming of NMRC and Mixta Real Estate to the exchange is understandable given that the Nigerian real estate sector has evidently been one of the worst-hit sectors with financing remaining a core challenge for property developers and prospective homeowners.

NMRC is a private sector-driven mortgage refinancing company with the public purpose of promoting home ownership for Nigerians while deepening the primary and secondary mortgage markets by raising long-term funds from the capital market, to enhance access to affordable housing finance in Nigeria.

DLM Capital Group, the sponsors of the transaction on the Exchange, were reported as saying that they were proud to have acted as Issuing House and Financial Advisors on the NMRC Series 3 Bond issuance.

According to them, the success of the deal indicated that investors had an appetite for long tenured assets, adding that the deal highlighted their confidence in NMRC’s operating model. “We expect the impact on the mortgage industry to be far-reaching, making home-ownership much more accessible to the average individual,” the company said.

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Experts are of the view that these recent admissions to FMDQ Exchange’s platform are reflective of the potential of the Nigerian DCM and the commendable level of confidence demonstrated by both issuers and investors in the market.

“They also validate the efficient processes and integrated systems through which FMDQ Holdings PLC (FMDQ Group or FMDQ), through its wholly owned subsidiaries – FMDQ Exchange, FMDQ Clear Limited, FMDQ Depository Limited and FMDQ Private Markets Limited – has sustained its uninterrupted service delivery to the market and its diverse stakeholders during these uncertain times and beyond,” the experts noted..
FMDQ Group is Africa’s first vertically integrated financial market infrastructure (FMI) group providing a one-stop platform for the seamless and cost-efficient execution, risk management, clearing, settlement and depository services, as well as data and information services across the debt capital, foreign exchange and derivatives markets in Nigeria.

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