DLM Capital Group has launched Sovereign Bond-Backed Composite Notes (SBCNs) to drive credit expansion in underbanked sectors.

The ₦30 billion SBCNs to be issued is a 10-year bond with a triple-A rating based on sovereign bond-backed cash flows and a 49.9 per cent hold-to-maturity yield.

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.

Proceeds from the issuance will be used for FGN Bonds and diversified SME and Consumer Lending.

GCEO of DLM Capital Group, Dr. Sonnie Ayere, stated that the initiative aimed to facilitate financial inclusion by unlocking credit for underserved markets in the country.

He explained further that the initiative is focused on de-risking the Nigerian financial market to attract pension funds, development finance institutions, and asset managers.

According to him, the initiative would support Nigeria’s non-oil GDP diversification through credit expansion, adding that by blending sovereign-backed security with enhanced yield exposure, portfolio managers can increase portfolio safety and performance.

He said: “This innovative instrument offers a true hybridisation of sovereign cash flows and corporate/consumer loan cash flows, providing principal protection anchored in sovereign debt markets and return enhancement from Nigeria’s high-growth, low-penetration credit sectors.

“It is structured as a public tradable security, backed by a Special Purpose Vehicle structure for ring-fenced asset and liability management, making it suitable for buy-side portfolios seeking credit enhancement and yield uplift without sacrificing a top rating profile.

“The instrument also provides portfolio diversification with high liquidity and tradability, aligning with the aspirations of investors seeking low-risk investments that yield decent returns.”

Group Managing Director of DLM Global Markets, Dr. Babatunde Obaniyi, noted that the DLM Sovereign Bond-Backed Composite Notes have been registered and regulated by the Securities and Exchange Commission (SEC).