Shelter Afrique, a pan-African housing finance and development institution has issued its debut ₦46bn ($110.7m) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market under its ₦200bn ($481.3m) bond issuance programme.

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

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

Kingsley Muwowo, Shelter Afrique’s Acting Managing Director, 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 longterm 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.”

The 5-year Tranche A bonds priced at 13.00% and the 7-year Tranche B bonds priced at 13.25%.

The tenors of the bonds are aligned with the organisation’s housing finance strategy and 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.

The high oversubscription demonstrates investors’ confidence in Shelter Afrique’s mandate to enable housing development in Africa, its strong management team, business strategy and credit profile.

Muwowo said 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.

He also noted that the volatile foreign exchange rate regimes in most member countries is one of the major challenges of financing affordable and decent housing in Africa.

“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,” he explained.

FDSH Capital acted as the Lead Issuing House while ARM Securities, FCMB Capital Markets and United Capital acted as the Joint Issuing Houses to 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.

United Capital Trustees Limited and CardinalStone Registrars acted as the Trustee and Registrar respectively.

The Receiving Banks include FSDH Merchant Bank, Stanbic IBTC and United Bank for Africa.

Tolu Osinibi, Managing Director of FSDH Capital, 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 on the bond issuance. We also thank the Board and management of Shelter Afrique for trusting us with this milestone transaction, and their commitment and dedication throughout the process.”