DLM opens bookbuilding on ₦30bn sovereign bond‑backed composite notes

DLM Funding SPV PLC today opened a bookbuilding window for its inaugural ₦30 billion Series 1 Sovereign Bond‑Backed Composite Notes (SBCNs).

This fixed‑income instrument represents a novel hybrid structure in Nigeria’s debt capital markets. The notes are partially backed by Federal Government of Nigeria (FGN) bonds, providing credit enhancement and principal protection, with the remainder of returns derived from a portfolio of consumer and SME loans.

The 10‑year securities mature in 2035 and carry an average life of roughly 5 and a half years. Both Global Credit Rating (GCR) and DataPro Ratings have assigned AAA ratings, attributing this to the sovereign‑backed component.

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Sonnie Babatunde Ayere, the Group CEO of DLM Capital Group, speaking on the notes, said,

“This bond was created to address the growing demand for innovative, secure, and high-yield investment opportunities in the Nigerian capital markets.”

According to DLM Capital Group, the promoter of the SPV, the notes have a hold-to-maturity yield of up to 47.07 percent per annum, substantially higher than yields on traditional government securities. Funds raised will not be split evenly, with the FGN bonds being the senior tranche, accounting for more than 50 percent. The remaining funds will be channeled into financing consumer and SME lending.

The strategy aims to secure loan repayments with bond‑derived cash flows, mitigating risk for noteholders.

The Group CEO described the note as a potential catalyst to attract institutional capital, such as pension funds and development finance institutions, into Nigeria’s under‑credited private sector. He added that the structure also helps curb exposure to corporate risk.

He noted, “For money managers, it protects against inflation, enhances portfolio credit quality, supports diversification, and delivers highly competitive returns without compromising credit risk.”