Shelter Afrique’s N46bn Unsecured Bond Oversubscribed By 60.7%
Shelter Afrique has announced that its ₦46 billion or $110.7 million Series 1 Fixed Rate Senior Unsecured Bond issued in Nigeria’s capital market was oversubscribed by 60.7 per cent.
Pan-African development finance institution exclusively dedicated to housing finance in Africa. Its shareholders include 44 African countries, the African Development Bank, the African Re-Insurance Corporation, and Fonds de Solidarité Africain (FSA).
Details of the oversubscription of its first bond in the Nigerian market show that the order book of the dual-tranche bond which comes under its ₦200 billion ($481.3 million) programme peaked at ₦64.3 billion ($154.6 million), enabling Shelter Afrique to exercise the ‘green shoe’ option and also, raise an additional ₦6 billion ($14.4 million) more than the original ₦40billion plan ($96.3 million).
The band rode on the back of an AA rating from GCR Ratings and an A+ rating from Agusto & Co, causing it to attract 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 five-year Tranche A bonds are priced at 13.00per cent and the seven-year Tranche B bonds are priced at 13.25per cent. Also, the tenors of the bonds were aligned with the institution’s housing finance strategy and long-term plans in Nigeria.
The proceeds will be applied 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 that this is the first time Shelter Afrique is tapping the Nigerian debt capital market and the positive reception is a clear indication of investors’ confidence in the long-term value proposition for the Nigerian housing market, assuring “the investors that the proceeds of the bond issue would be put into good use to ensure that more value is created for them.”
Mewtwo stressed the issuance of the Naira-denominated bonds reflects the organisation’s desire to focus on tailor-made, long-term funding solutions for the provision of affordable and adequate housing in Nigeria and across Africa, noting that the volatile foreign exchange rate regimes in most member countries were one of the major challenges of financing affordable and decent housing in Africa.
He said: “Constant currency fluctuations make it difficult for those who borrow in foreign currencies to honour 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.”
At the signing ceremony in Lagos, Nigeria, the Managing Director of FSDH Capital Limited, 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.”
Shelter Afrique is a pan-African housing finance and development institution established by African governments to address the need for a sustainable housing delivery system and related infrastructure projects in Africa.
The organisation’s mandate is to provide financing through debt, quasi-equity, and equity to both public and private institutions for housing and urban infrastructure projects in its member countries. Shelter Afrique builds strategic partnerships and offers a host of products and related services to support the efficient delivery of affordable housing and commercial real estate. These include project finance, institutional lending, equity investments & joint ventures, trade finance, and social housing. The organisation also offers practical advice and technical assistance to a wide range of industry stakeholders.
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