By Jude Njoku

Civil servants who were living in government-owned quarters at Abuja were during the monetization policy, given the option of expressing interest in buying the houses which they occupied.

But most of them didn’t have the money to buy the houses hence the Federal Government requested the Federal Mortgage Bank of Nigeria FMBN, to to issue a bond in order to raise money from the capital market to refinance the mortgages the Primary Mortgage Institutions PMIs were organising on behalf of the affected civil servants.

FMBN and its issuing house sold the first tranche of N26 billion in 2007. Impressed with the outcome, Messrs FMBN SPV Issuer Limited last week, issued another N6billion notes by way of private placement to qualified institutional investors.

The Series 2 Fixed Rate Notes issued under the N100billion Residential Mortgage Backed Securities Programme which is sponsored by FMBN, is 100 percent guaranteed by the Federal Government of Nigeria. An application will be made to list the Series 2 Notes on the Nigerian Stock Exchange.

Speaking at the signing ceremony, the Chief Executive Officer CEO of Dunn Loren Merrifield which acted as the Lead Arranger/Lead Book Runner, Mr. Sonnie Ayere said the transaction is “a reflection of FMBN’s mandate to link the capital market with the housing industry and to establish an evergreen source of providing long tenured and cheaper financing for the mortgage market in Nigeria through the capital market”.

Mr. Ayere listed the advantages of mortgage securities to include liquidity to the housing sector, housing affordability and further deepening of the Nigerian Capital Market with special emphasis on the Mortgage Backed Securities subset of the market.

The Series 2 Notes has been granted tax exemption and qualifies as a ‘liquid asset’ for banks and shall be treated as ‘government security’ in accordance with the First Federal Mortgage Bank of Nigeria Bonds and Mortgage Backed Bonds Regulations 2006.

An Executive Director with FMBN, Mr. Bola Ogunsola stressed the need for a credible and sustainable mortgage system in the country and commended all the transaction partners of their diligence in seeing the transaction through. He assured the the apex mortgage bank possess the expertise to galvanise the funding and distribute them to all the relevant sectors.

Also speaking at the brief ceremony, the  Executive Director, Policy and Strategy, (Loans set-up and pay-off) in FMBN, Mr Newman Ordia said this second  tranche of N6 billion closes it for people who bought houses under the Federal Government monetization policy.

“The 3rd series that will be launched soon, will be purely an FMBN programme and will still be under the N100 billion guarantee of government because we have not exhausted the N100 billion. What we have done so far is 26 billion plus 6 billion which is 32 billion. So we can still go to the market under the same guarantee for the balance of 68 billion to do more programmes,” he said.