Nigeria’s Mortgage Market roars to Life as NMRC offers N440bn bonds

Nigeria’s much needed mortgage market will take a new life next week as the Nigerian Mortgage Refinancing Company (NMRC) kicks off the expansive scheme that will see it raise an initial N10billion in bonds.

 

The state-backed mortgage-refinance company will sell a total N440 billion ($2.2 billion) of bonds as it seeks to expand access to housing funds, its chief executive officer told Bloomberg.

According to Charles Iyangete, the managing director of the company, NMRC will start with the sale of N10 billion of debt next week, the first step in a quarterly programme to raise N140 billion.

That’s “part of a bigger programme” over a five-year period, he said.

The 15-year bonds will be used to refinance existing mortgages that meet specified underwriting requirements and will be listed on the Financial Market Dealers Association trading platform, Inyangete said, declining to give further price information.

Nigeria, Africa’s most populous nation with more than 170 million people, seeks to expand access to housing finance to help cut a deficit of 17 million houses.

The continent’s largest economy needs investment of N3.5 trillion to build 780,000 housing units annually to help meet rising demand, according to Inyangete.

NMRC is rated BBB+ by the Johannesburg-based Global Credit Rating Co., which provides debt evaluation and ratings across Africa, while its proposed bond, now in the process of price discovery, is rated AAA, as it’s backed by a Nigerian government guarantee, he said.

While the NMRC has been able to provide a uniform underwriting standard for the country’s mortgage market, the absence of a foreclosure law is hampering quicker expansion, Inyangete said.

“We see a need for a legal structure that is clear and simple for the creation of mortgages,” he said. The NMRC is taking a “state-based approach” as it tries to push for passage of proposed mortgage and foreclosure legislation. This includes creating mortgage boards for the respective states to simplify the process.

The government-controlled mortgage company plans to sell shares to the public before the end of the year to dilute its ownership, according to the chief executive officer. “Our ideal scenario is to have every bank that is interested in providing mortgage financing to be part of it,” he said.

Twenty-one of the country’s 36 states “have already indicated interest to be part of the pilot and we will go out with those,” Inyangete said.

Nigeria’s property market is currently valued at $41 billion, according to the NMRC, representing about 8 percent of gross domestic product. The company plans to more than triple this over the next few years as it helps extend maturities for Nigerian home buyers to as much as 20 years, Inyangete said.