Shelter Afrique’s Debut N46 Billion Bond Issuance In Nigeria Oversubscribed By 60.7%

Follow Us On Social Media

HousingShelter Afrique, the pan-African development finance institution, is pleased to announce the successful completion of its debut ₦46 billion ($110.7 million) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market under its ₦200 billion ($481.3 million) bond issuance program.

The dual-tranche bond issuance was 60.7% oversubscribed with the order book peaking at ₦64.3 billion ($154.6 million), enabling Shelter Afrique to exercise the ‘green shoe’ option and raise an additional ₦6 billion ($14.4 million) more than the original ₦40 billion plan ($96.3 million).

The oversubscription rate demonstrates investors’ confidence in Shelter Afrique’s mandate to enable housing development in Africa, coupled with the institution’s strong management team, business strategy and credit profile.

On the back of an AA rating from GCR Ratings and an A+ rating from Agusto & Co, the bond issuance attracted participation from a diverse range of institutional investors, including pension funds, banks, and insurance companies. The oversubscription rate demonstrates investors’ confidence in Shelter Afrique’s mandate to enable housing development in Africa, coupled with the institution’s strong management team, business strategy and credit profile.

The 5-year Tranche A bonds are priced at 13.00% and the 7-year Tranche B bonds are priced at 13.25%. The tenors of the bonds are aligned with the institution’s housing finance strategy and long-term plans in Nigeria. Shelter Afrique will use the bond proceeds to fund mass housing development by tier 1 real estate developers and to provide lines of credit.

FDSH Capital Limited acted as the Lead Issuing House while ARM Securities Limited, FCMB Capital Markets Limited and United Capital PLC acted as joint issuing houses for the bond issuance. Other professional parties include Aluko & Oyebode and Banwo & Ighodalo who acted as Solicitors to the Issue/Issuer and Solicitors to the Trustee respectively. While United Capital Trustees Limited and CardinalStone Registrars Limited acted as the Trustee and Registrar respectively. The Receiving Banks include FSDH Merchant Bank Limited, Stanbic IBTC PLC and United Bank for Africa PLC.

Shelter Afrique’s Acting Managing Director, Kingsley Muwowo said: “This is the first time Shelter Afrique is tapping the Nigerian debt capital market and the positive market reception is a clear indication of investor confidence in our long-term value proposition for the Nigerian housing market. We would like to assure our investors that we shall put the proceeds of the bond issue into good use that will ensure that more value is created for them.”

Mr. Muwowo said the issuance of the Naira-denominated bonds reflects the organization’s desire to focus on tailor-made, long-term funding solutions for the provision of affordable and adequate housing in Nigeria and across Africa. He also noted that the volatile foreign exchange rate regimes in most member countries are one of the major challenges in financing affordable and decent housing in Africa, further explaining that:

Constant currency fluctuations make it difficult for those who borrow in foreign currencies to honor their loans because of the foreign exchange exposure risks. Through this bond issuance, developers and primary mortgage lenders in Nigeria will be able to access funding in Naira, thereby reducing such risks.”

Speaking at the signing ceremony held in Lagos, Nigeria, the Managing Director of FSDH Capital Limited, Mr. Tolu Osinibi, said:

FSDH Capital is pleased to have advised Shelter Afrique on its successful debut bond issuance in Nigeria’s capital market. Shelter Afrique continues to play a pivotal role in housing development across Africa and the success of the bond issuance will encourage other supranational financial institutions to tap Nigeria’s debt capital market for their Naira funding needs. We thank the investor community for their support of the bond issuance. We also thank the Board and management of Shelter Afrique for trusting us with this milestone transaction, and for their commitment and dedication throughout the process.”

On the back of an AA rating from GCR Ratings and an A+ rating from Agusto & Co, the bond issuance attracted participation from a diverse range of institutional investors, including pension funds, banks, and insurance companies.

The 5-year Tranche A bonds are priced at 13.00% and the 7-year Tranche B bonds are priced at 13.25%. The tenors of the bonds are aligned with the institution’s housing finance strategy and long-term plans in Nigeria. Shelter Afrique will use the bond proceeds to fund mass housing development by tier 1 real estate developers and to provide lines of credit.

FDSH Capital Limited acted as the Lead Issuing House while ARM Securities Limited, FCMB Capital Markets Limited and United Capital PLC acted as joint issuing houses for the bond issuance. Other professional parties include Aluko & Oyebode and Banwo & Ighodalo who acted as Solicitors to the Issue/Issuer and Solicitors to the Trustee respectively.

While United Capital Trustees Limited and CardinalStone Registrars Limited acted as the Trustee and Registrar respectively. The Receiving Banks include FSDH Merchant Bank Limited, Stanbic IBTC PLC and United Bank for Africa PLC.

 


Follow Us On Social Media