By Babajide Komolafe

DLM Capital Group has announced the issuance of the first ever Sovereign Backed Composite Note, SBCN, to raise N30 billion with a 10 year tenor.

Announcing the issuance at a press briefing yesterday, GCEO of DLM Capital Group, Dr. Sonnie Ayere, said the DLM Funding Series-1 Sovereign Bond Backed Composite Notes (SBCNs) represent a first-of-its-kind public bond structure globally, which uniquely combines sovereign bond-backed principal and interest protection with enhanced corporate/consumer loan cashflows to deliver high-yield, AAA-rated returns.

Ayere said that the DLM’s SBCNs are the first publicly issued bonds to integrate Federal Government of Nigeria (FGN) Bond cash flows with income from diversified consumer and SME loan portfolios. It is AAA-rated by virtue of sovereign bond backing, not solely by credit enhancement or insurance. It has a Market-tested structure with dual benefit, and it also offers principal preservation with Above-market hold-to-maturity, HTM yield of 49.9 per cent.

He said in addition to this, the DLM’s SBCNs is structured as a public tradable security, not just a fund or private credit vehicle, while it is also backed by a Special Purpose Vehicle, SPV, structure for ring fenced asset and liability management.

He added that pension funds can use the DLM’s SBCNs to achieve long-duration, high-yield exposure within strict risk tolerance frameworks as well as long term AAA rated returns with liquidity.

“Also, the DLM’s SBCNs can help Development Finance Institutions mobilize private capital into impact sectors without compromising fiduciary obligations. With the SBCNs, asset managers can enhance portfolio yields while improving credit quality and diversification as well as achieve diversified fixed income with enhanced returns,” Ayere said.