Announcements Financial Institutions Rating Alerts

GCR affirms Nigeria Mortgage Refinance Company Plc’s Series 1, Series 2, and Series 3 Bonds National Scale Long-term Ratings of AAA(NG), Outlooks Stable.

Lagos, 17 December 2021 – GCR Ratings (“GCR”) has affirmed Nigeria Mortgage Refinance Company Plc’s Series 1, Series 2, and Series 3 Bonds national scale long-term issue ratings of AAA(NG), with a Stable Outlook.

Rated Issue Rating class Rating scale Rating Outlook / Watch
Series 1 N8bn Guaranteed Bonds Long Term Issue National AAA(NG) Stable Outlook
Series 2 N11bn Guaranteed Bonds Long Term Issue National AAA(NG)
Series 3 N10bn Guaranteed Bonds Long Term Issue National AAA(NG)

Rating Rationale

The Series 1, Series 2 and Series 3 Bonds rating (“the Bonds”) reflect the strength of the Federal Government of Nigeria (“FGN” or “the Guarantor”). FGN unconditionally and irrevocably guarantees to the Trustees for the benefit of the Noteholders, by way of revolving and continuing guarantee, the due and punctual observance and performance by the Issuer of all its payment obligations in respect of all and any sums (including the principal and interest) due and payable by the Issuer under the Issues. In addition, all payment obligations under the Issue (except otherwise provided for by applicable laws) rank at least equal with all other present or future secured or unsubordinated payment obligations of both the Issuer and the Guarantor.

The bonds were issued under Nigeria Mortgage Refinance Company Plc’s (“the Issuer”) N440bn Medium Term Notes Programme, as amended, backed by a resolution of NMRC’s Board of Directors which authorises the Issuer to issue the Notes/Bonds in series, different forms, and under different terms and conditions as may be deemed fit by management. The Series 1 Bonds, Series 2 Bonds, and Series 3 Bonds were issued in November 2015, May 2018 and October 2020 respectively. Coupon rate for the Bonds are 14.9%, 13.8% and 7.2% respectively, with maturities being 15 years for the Series 1 and Series 2 Bonds, and 7 years for the Series 3 Bonds.

According to the latest Trustees reports on the Bonds, the Issuer has been fulfilling its obligations under the Issues on a timeous basis, with no recourse to the FGN guarantee so far.

Outlook Statement

The Stable outlook reflects GCR’s expectation that both the Issuer and the Guarantor will continue to ensure adequate funding of the payment accounts.

Rating Triggers

Should the rating of the Guarantor change, the rating of the Bonds may also change, but not necessarily in the same quantum.

Analytical Contacts

Primary analyst Funmilayo Abdulrahman Senior Analyst, Financial Institutions
Lagos, NG Funmilayo@GCRratings.com +234 1 904 9462
Committee chair Matthew Pirnie Group Head of Ratings
Johannesburg, ZA MatthewP@GCRratings.com +27 11 784 1771

Related Criteria and Research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Financial Institutions, May 2019
GCR Ratings Scale, Symbols & Definitions, May 2019
GCR Country Risk Scores, December 2021
GCR Financial Institutions Sector Risk Score, December 2021

Ratings history

Nigeria Mortgage Refinance Company Plc N440bn Medium Term Note Programme

Rated Issue Review Rating scale Rating Outlook Date
Series 1 N8bn Guaranteed Bonds Initial National AAA(NG) Stable November 2015
Series 1 N8bn Guaranteed Bonds Last National AAA(NG) Stable January 2021
Series 2 N11bn Guaranteed Bonds Initial National AAA(NG) Stable October 2018
Series 2 N11bn Guaranteed Bonds Last National AAA(NG) Stable January 2021
Series 3 N11bn Guaranteed Bonds Initial/last National AAA(NG)(IR)* Stable January 2021

*IR stands for indicative rating

Glossary

Balance Sheet Also known as Statement of Financial Position. A statement of a company’s assets and liabilities provided for the benefit of shareholders and regulators. It gives a snapshot at a specific point in time of the assets the company holds and how they have been financed.
Capital The sum of money that is invested to generate proceeds.
Cash Funds that can be readily spent or used to meet current obligations.
Debt An obligation to repay a sum of money. More specifically, it is funds passed from a creditor to a debtor in exchange for interest and a commitment to repay the principal in full on a specified date or over a specified period.
Diversification Spreading risk by constructing a portfolio that contains different exposures whose returns are relatively uncorrelated. The term also refers to companies which move into markets or products that bear little relation to ones they already operate in.
Exposure Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For a company, its exposure may relate to a particular product class or customer grouping. Exposure may also arise from an overreliance on one source of funding. In insurance, it refers to an individual or company’s vulnerability to various risks
Income Money received, especially on a regular basis, for work or through investments.
Interest Scheduled payments made to a creditor in return for the use of borrowed money. The size of the payments will be determined by the interest rate, the amount borrowed or principal and the duration of the loan.
Issuer The party indebted or the person making repayments for its borrowings.
Leverage With regard to corporate analysis, leverage (or gearing) refers to the extent to which a company is funded by debt.
Liquidity The speed at which assets can be converted to cash. It can also refer to the ability of a company to service its debt obligations due to the presence of liquid assets such as cash and its equivalents. Market liquidity refers to the ease with which a security can be bought or sold quickly and in large volumes without substantially affecting the market price.
Long Term Rating See GCR Rating Scales, Symbols and Definitions.
Margin A term whose meaning depends on the context. In the widest sense, it means the difference between two values.
Market An assessment of the property value, with the value being compared to similar properties in the area.
Maturity The length of time between the issue of a bond or other security and the date on which it becomes payable in full.
Rating Outlook See GCR Rating Scales, Symbols and Definitions.
Risk The chance of future uncertainty (i.e. deviation from expected earnings or an expected outcome) that will have an impact on objectives.
Short Term Rating See GCR Rating Scales, Symbols and Definitions.
Short Term Current; ordinarily less than one year.

Salient Points of Accorded Ratings

GCR affirms that a.) no part of the ratings were influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

The credit rating has been disclosed to Nigeria Mortgage Refinance Company Plc. The rating above was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the rating.

Nigeria Mortgage Refinance Company Plc participated in the rating process via telephonic management meetings, and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible. The information received from Nigeria Mortgage Refinance Company Plc and other reliable third parties to accord the credit ratings included:

  • Audited financial results as at 31 December 2020;
  • Unaudited financial results as at 30 September 2021 and
  • Other relevant information.


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