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Nigeria Bond Analysis | Public Credit Rating
Nigeria Mortgage Refinance Company Plc N140bn Medium Term Note Programme (Series 1 Bonds)
Nigeria Bond Analysis September 2017
Key Counterparties:
Issuer:
Nigeria Mortgage Refinance Company Plc
Issuer’s long-term national scale credit rating:
Rating: BBB+(NG) (expiring 30 August 2018)
Rating Watch Guarantor:
Federal Government of Nigeria (“FGN”)
Trustees:
STL Trustees Limited
Stanbic IBTC Trustees Limited
Account Bank/Paying Agent:
Standard Chartered Bank Limited
Summary of Transaction:
Programme limit N140bn
Issue amount (Series 1) N8bn
Outstanding amount N7.68bn
Ranking Senior secured/
Unsubordinated
Issue date 29 July 2015
Maturity date 29 July 2030
Coupon (Series 1) 14.9%
Rating History:
Initial rating^ (November 2015)
Long-term: AAA(NG)(sf)
Rating outlook: Stable
Last rating (August 2016)
Long-term: AAA(NG)(sf)
Rating outlook: Stable
^Final rating.
Related Methodologies/Research:
Global Master Criteria for Rating Banks and
Other Financial Institutions, updated March
2017
Global Credit Linked Note and Repackaging
Vehicle Rating Criteria, updated May 2017
Glossary of Terms/Ratios, February 2016
GCR Contacts:
Primary analyst:
Julius Adekeye
Senior Credit Analysts
Committee Chairperson:
Dave King
Analyst location: Nigeria
Tel:+2341 462-2545
Website: www.globalratings.com.ng
Transaction summary
The Series 1 Bonds (“the Bonds, “debt Issue, “the Issue”) were issued on 29 July
2015 under Nigeria Mortgage Refinance Company Plc’s (“NMRC”, “the Issuer”,
“the company”) N140bn Debt Issuance Programme (“DIP”). The DIP is backed by a
resolution of NMRC’s Board of Directors (“Board”), which authorises the Issuer to
issue the Bonds in series, different forms, and under different terms and conditions as
may be deemed fit by the Board. The Series 1 Bonds (pay-through fixed rate notes)
constitute direct, senior secured, unconditional and unsubordinated obligations of the
Issuer, ranking pari-passu, without any preference among themselves.
The Series 1 Bonds are backed by FGN guarantee. FGN unconditionally and
irrevocably guarantees to the Trustees for the benefit of the Bondholders, 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
Series 1 Bonds. 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.
Note must be taken of the fact that the rating accorded to the Series 1 Bonds relates
to timely payment of interest and principal. The rating exclude an assessment of the
Issuer’s ability to pay any (early repayment) penalties.
Summary rating rationale
The Issuer has been on track in the execution of its maiden five-year strategic
plan, with notable progress evident in the area of market development
(particularly, the development and implementation of generally accepted uniform
underwriting standards (“UUS”) to benefit potential borrowers and enable them
to purchase homes from developers at affordable prices). However, the pace of
advancement in mortgage re-financing activities was initially constrained by the
dearth of eligible mortgages and, more recently, high funding costs.
According to the Joint Trustees’ performance reports on the Series 1 Bonds (up
to August 2017), the Issuer has been fulfilling its obligations under the Issue on a
timeous basis, with no recourse to the FGN Guarantee.
Global Credit Rating Company Limited (“GCR”) has accorded the NMRC Bond,
which is unconditionally and irrevocably guaranteed by FGN, a long-term
national scale rating of AAA(NG)(sf), as the rating of the Bonds is credit linked to
the rating of the FGN in its capacity as Guarantor. The rating accorded to the
Bonds is solely dependent on the validity of the FGN Guarantee and the ability of
the FGN to pay all sums of money the Issuer may have failed to pay, when due,
in accordance with the Series 1 Bonds’ Trust Deed.
GCR received a legal opinion from the solicitor to the Bond Trustees (G. Elias &
Co. (Solicitors and Advocates)), dated 13 May 2015, stating that the FGN
Guarantee represents the legal, valid and binding obligations of the Guarantor
and is enforceable against it in accordance with the terms of the Guarantee. GCR
relied on this legal opinion to accord the rating to the Series 1 Bonds. However, it
should be noted that the legal opinion has not been reviewed by another external
legal counsel. The rating accorded should not be viewed as a replacement of the
legal advice that investors should seek on the validity and enforceability of the
Transaction Documents and the FGN Guarantee.
Should the rating of the Guarantor change, the rating of the Series 1 Bonds may
also change, but not necessarily in the same quantum.
Security class Amount Rating Scale Rating Rating outlook Expiry date
Senior Secured Bond N7.68bn National AAA(NG)(sf) Stable August 2018
Nigeria Bond Analysis | Public Credit Rating Page 2
Details of the Bonds
NMRC has raised an aggregate sum of N8bn through
the issuance of pay-through fixed rate notes, being
the first tranche of its N140bn DIP. Key
characteristics of the Issue are shown in Table 1.
Table 1: Basic features Series 1
Amount N8bn
Maturity profile (legal) 15 years
Issue date 29 July 2015
Maturity date 29 July 2030
Par value N1,000
Coupon rate 14.9%
Ranking Senior secured
Source: Series 1 Supplemental Shelf Prospectus.
Status of the Bonds
The Bonds constitute direct, senior secured,
unconditional and unsubordinated obligations of the
Issuer, ranking pari-passu, without any preference
among themselves. Furthermore, all payment
obligations under the Issue (except as 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.
Use of proceeds
According to the placement documents, the net
proceeds of the Offer, amounting to N7.72bn are to
be applied towards refinancing eligible mortgage
loans originated by eligible mortgage lending banks.
At 30 June 2017, the net proceeds of the Series 1
Bonds had been fully utilised for this purpose.
Other key features
Optional redemption/ early redemption
The Bonds are callable at the option of the Issuer
after 10 years (i.e., from 29 July 2025), subject to a
notice period of 20-60 days. The Issuer may also
redeem all outstanding Bonds due to a change in
legislation, taxation and occurrence of an Event of
Default, which is defined as:
Payment default: Issuer’s failure to pay any
amount due (interest or principal) under the
Bonds on its due date, where such payment
remains outstanding for more than 10 business
days.
Cross default: Where any indebtedness of the
Issuer in excess of N500m (or its equivalent in
other currencies) remains outstanding for more
than 10 days after the due date.
Breach of other obligations: Issuer’s failure to
comply with its other obligations under the Bond
Issue, and where such can be remedied, failure to
remedy the non-compliance within 20 days after
a written notice from the Trustees requiring such
remedy.
Insolvency: Where the Issuer becomes insolvent.
Unenforceability of obligations: Where any of
the Series 1 Bonds, the Trust deed, and/or final
terms become(s) void or unenforceable.
An occurrence of any of these events would result in
an early redemption of the Bonds.
Guarantee
Per the Deed of Guarantee, dated 30 April 2015, FGN
unconditionally and irrevocably guarantees to the
Trustees for the benefit of the Bondholders, 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, arising from or in
relation to Bonds issued by NMRC for an amount not
exceeding N440bn, provided that the initial guarantee
amount shall be N50bn, followed by a further
N50bn, after which a review of the programme’s
efficacy and impact on affordable mortgages in
Nigeria will be performed before such other amounts
may be extended by the Guarantor.
Coupon payment
Interest on the Bonds is accrued at 14.9% per annum
from 29 July 2015, and payable on a quarterly basis.
Principal repayment
Principal repayment is on an amortised basis,
whereby the principal payment due (“scheduled
principal”) and unscheduled principal payment (from
excess funds available from the Bonds’ mortgage
portfolio for this purpose after the payment of the
scheduled principal) are to be made on each coupon
payment date.
According to the Joint Trustees’ performance report
on the Bonds, the Issuer has fulfilled its obligations
under the Issue on a timeous basis, with no recourse
to the FGN Guarantee, from issue to date. Interest
totaling N2.2bn and principal totaling N318.14m had
been paid on the Bonds up to 30 June 2017, with the
outstanding principal amounting to N7.68bn as at this
date.
Table 2: Performance to date Principal payment
Interest payment
Total paymen
t Payment date N’m N’m N’m
15/9/2015 19.71 157.18 176.89
15/12/2015 38.10 297.27 335.37
15/3/2016 39.52 295.85 335.37
15/6/2016 40.99 294.37 335.37
15/9/2016 42.52 292.85 335.37
15/12/2016 44.10 291.26 335.37
15/3/2017 45.75 289.62 335.37
15/6/2017 47.45 287.92 335.37
Total 318.14 2,206.32 2,524.48
Source: Joint Trustees’ report.
Security
The Issuer has created a security interest in the
transaction accounts in favour of the Security Trustee
Nigeria Bond Analysis | Public Credit Rating Page 3
on behalf of the Trustees via a first ranking fixed
charge in accordance with the terms and conditions of
the Security Trust Deed. Likewise, the Issuer has
assigned via security, subject to a provision for re-
assignment on redemption of its obligations under the
Trust Deed, its present and future rights, benefits,
interests, claims and proceeds of payment under the
Security Trust Deed and the Master Purchase,
Refinance and Servicing Agreement.
Undertakings by the Issuer
In line with Issuer’s undertakings, the Series 1 Bonds
have been listed on the FMDQ1 quotation platform,
and the listing is expected to be maintained until the
Maturity Date.
Key transaction parties
Issuing House
The Issuing House is Dunn Loren Merrifield
Advisory Partners Limited.
Note Trustees
STL Trustees Limited (formerly Skye Trustees
Limited) and Stanbic IBTC Trustees Limited are
jointly the Note Trustees to the Series 1 Bonds. Both
Trustees possess relevant experience in the local
market. STL Trustees Limited’s experience in the
local market spanned over two decades, while that of
Stanbic IBTC Trustees is around six years.
Security Trustee
The Security Trustee to the Series 1 Bonds is FBN
Trustees Limited, a subsidiary of FBN Holdings Plc.
The company has operated in the local market for
over 30 years.
Account Bank/Paying agent
The appointed Account Bank and Paying Agent is
Standard Chartered Bank Limited (“SCBL”), a
wholly owned subsidiary of Standard Chartered Bank
Plc. SCBL is one of the foreign banks in Nigeria and
the parent currently has an international scale long-
term issuer credit rating of A+.
Guarantor
The FGN, as represented by the Federal Ministry of
Finance through a Deed of Guarantee, dated 30 April
2015, entered into with the Issuer, unconditionally
and irrevocably guaranteed to the Trustees (for the
benefit of the Bondholders) the punctual performance
of all payment obligations (principal and interest) of
the Issuer under the Series 1 Bonds. Therefore, the
rating of the Bonds is dependent upon the AAA(NG)
long term national scale credit rating of the FGN. Any
change in the rating of FGN could potentially have an
impact on the rating of the Bonds.
1 FMDQ OTC Plc is a Securities and Exchange Commission (“SEC”) licensed over-the-counter (“OTC”) market securities exchange.
Issuer
NMRC was incorporated as a public liability
company in June 2013 and thereafter licensed as a
mortgage refinancing company by Central Bank of
Nigeria (“CBN”) in February 2015, with operations
commencing immediately. NMRC was established as
a private sector entity with a public purpose (being
development of the primary and secondary mortgage
markets in Nigeria, by raising long-term funds from
both local and foreign capital markets). Accordingly,
NMRC’s key mandate is to purchase qualifying
mortgage loans from primary mortgage banks
(“PMBs”) and other banks, and to provide mortgage
lenders with long-term fixed rate funds to expand
their operational scale and ultimately better serve the
mass market sector of the economy.
Organisational profile
Ownership
NMRC’s ownership base expanded from 21
shareholders at FY16 to 27 shareholders at 31 July
2017, as an additional five PMBs and a non-bank
institution financial institution invested in the
company in the current year. Consequently, NMRC is
presently owned by two FGN-related institutions, 19
PMBs, four commercial banks and two non-bank
financial institutions2. However, the equity stake of
the FGN-related institutions is expected to reduce
going forward, as NMRC’s code of corporate
governance caps public sector shareholding in the
company at 10% (although no definite timeline has
been set in this regard).
Corporate governance structure
NMRC’s governance structure (in terms of board
composition), is considered satisfactory. The board
comprised 13 members (three executive directors and
ten non-executive directors (including an independent
Chairman and three other independent directors). The
membership of the board was increased from 12 to 13
directors following the appointment of the current
Chairman, Dr. Charles Okeahalam, in April 2016. Dr.
Okeahalam took over the chairmanship from Mr
Herbert Wigwe, who had replaced the pioneer
chairperson (Dr. Okwonjo Iweala) in an acting
capacity. Overall, five new members (one non-
executive and four independent directors) joined the
board in 2016. Dr. Bakari Wadinga, a representative
of the Ministry of Finance (“MOF”) on the board
replaced Mr Omoniyi Fagbemi at the instance of the
MOF.
The profile of board members is considered strong,
with all the non-executive directors being executive
managers within owner institutions/other financial
institutions. The role of the Chairman is distinct from
that of the CEO. Specifically, the Chairman is not
2 This refers to Stanbic IBTC Investment Limited, a wholly owned
subsidiary of Stanbic IBTC Holding Company Plc, and Lagos Building & Investment Company Limited.
Nigeria Bond Analysis | Public Credit Rating Page 4
involved in the day-to-day operations of the company
and is not a member of any sub-committee of the
board.
The board performs its oversight functions through
six standing committees, being the Board Governance
and Nomination Committee, the Board Finance and
General Purpose Committee, the Board Credit and
Investment Committee, the Board Risk Management
Committee, the Board Audit Committee, and the
Board Remuneration Committee. All the board
committees met at least quarterly during FY16.
Financial profile
Funding composition
Sources of funding for NMRC are equity capital and
borrowings (including corporate bonds and lines of
credit from banks and multilateral financial
institutions). The company’s funding structure
remained relatively stable in FY16, made up of
borrowings (78.7%) and equity capital (21.3%).
Internal capital generation augmented shareholders’
funds by 10.9% to N8.6bn at FY16, translating to a
strong RWCAR of 101% (more than ten times the
statutory minimum requirement), which is partly the
result of the low risk-weighting of a significant portion
of its asset base.
Management had planned to raise further equity
during FY16 to broaden NMRC’s ownership base to
include DFIs and further strengthen its capital base to
support its borrowing capacity, but this has yet to be
realised to date due to unfavorable market conditions.
Borrowings
At FY16, total borrowings stood at N31.8bn,
representing a marginal 2.4% increase over the FY15
level. This increase arose mainly from accrued
payments due, as there were no additional borrowings
during the year.
Table 3: Borrowings N'm
Debt securities 7,542.9
Borrowings from FGN 24,268.7
Total 31,811.6
Debt securities represent the outstanding amount on
NMRC’s N8bn Series 1 Bonds, issued in July 2015.
The Series 1 Bonds, issued under the company’s
N140bn DIP, have a tenor of 15 years, maturing in
July 2030. Interest accrues on these Bonds at the rate
of 14.9% per annum, payable (together with principal
due) on a quarterly basis. The Series 1 Bonds are
amortising Bonds, with scheduled principal amounts
payable quarterly, commencing from 15 September
2015.
The amount due to FGN represents an International
Development Agency (“IDA”) facility granted to FGN
for the purpose of establishing a mortgage liquidity
facility for funding of the housing finance programme.
The tenor of the facility is 40 years, with interest
accruing at 0.75% per annum plus the CBN foreign
exchange hedge rate of 3.5% per annum, and has a
moratorium period of 10 years on principal
repayments.
Refinance mortgage loan portfolio
Total refinance loans amounted to N8.2bn at FY16,
being 4.3x the FY15 level. Given NMRC’s stringent
conditions for accessing its re-finance facility (with
limited eligible mortgages available presently), the
loan book has remained concentrated, with just 8
obligors at FY16 (although improving from 3
obligors at FY15).
Asset quality
NMRC has maintained strong asset quality (in its re-
finance loans portfolio) over the two year review
period, with no impaired loan reported to date.
Table 5: Asset quality (N'm) FY15 FY16
Gross Advances 1,908.3 8,185.2
Loan Classification: Performing 1,908.3 8,185.2
Impaired - -
Provision for impairment: (42.4) (80.9)
Collective impairment (42.4) (80.9)
Specific impairment - -
Net NPLs (42.4) (80.9)
Gross NPLs ratio (%) - -
Financial performance
NMRC’s performance in FY16 was supported largely
by non-core income, with mortgage refinance loans
contributing a low 14.2% to the reported interest
income for the year. The bulk (66.6%) of interest
income emanated from investments in FGN
securities, while the remainder was derived from
placements with banks. While operating expenditure
rose by 13.1%, the cost ratio improved to 56.1%
(FY15: 73.9%) on the back of the robust income
growth. Consequently, an after tax profit of N1.3bn
was registered for the year, translating to a 164.7%
increase over the FY15 level. The ROaA and ROaE
rose from 1.9% and 6.5% in FY15 to 3.2% and
15.6% in FY16 respectively.
NMRC’s budget for 2017, a decline of 4.5% in pre-
tax profit relative to FY16, is considered to be highly
conservative.
While an increase in earning assets is expected to
result in total operating income growth of 25.7%,
higher impairment charges (mainly collective
provisions, estimated based on the forecast enlarged
mortgage refinance loan book), and increases in
operating expenditure are expected to constrain
performance at the pre-tax level. However, a pre-tax
profit of N951.5m was reported for 1H FY17,
Nigeria Bond Analysis | Public Credit Rating Page 5
representing a 54.5% outperformance of the FY17
full year budget (on an annualised basis).
Table 4: Financial performance (N’m)
Actual FY16
Budget FY17
Growth %
Income statement Net interest income 3,023 3,801 25.7
Total operating income 3,023 3,801 25.7
Bad debt charge (38) (500) 1,215.8
Operating expenses (1,695) (2,070) 22.1
NPBT 1,290.0 1,232 (4.5)
Statement of financial position Mortgage refinance loans 8,104 57,745 612.5
Total assets 40,789 93,331 128.8
Tier 1 capital 8,625 11,696 35.6
Notwithstanding the slow upscaling of the funding
programme, occasioned by the unfavourable market
conditions for debt issuance, NMRC has progressed
well with the execution of its maiden strategic plan.
Apart from its core mandates of mortgage refinance
and market development activities, NMRC is also
exploring the possibility of broadening its business
scope, and is currently in discussions with the
relevant regulators in this regard. Furthermore, the
company is planning to undertake a further debt issue
under its N140bn DIP by 3Q FY17. If successful, this
will support earning asset growth and ultimately
bolster earnings.
Rating considerations
Legal Opinion
GCR received and reviewed a copy of the legal
opinion prepared by Nigerian transaction counsel
(G. Elias). GCR understands, amongst others, from
the legal opinion that:
The execution and delivery of the Guarantor of
the guarantee and the performance by the
Guarantor of its respective obligations
thereunder and the consummation of the
transaction will not result in a violation by the
Guarantor of any law or regulation having the
force of law in Federal republic of Nigeria
(“FRN”) and applicable to the Guarantor’s
performance;
The guarantee constitutes, or constitute from its
delivery and release, legal, valid and binding
obligations of the Guarantor enforceable against
it in accordance with the terms of the guarantee;
In any proceedings taken in FRN for the
enforcement of the guarantee, the choice of
Nigerian law as the governing law of the
guarantee will be recognised and given effect to
by the Nigeria courts; and
The irrevocable waive of sovereign immunity by
the Guarantor is legal, valid, and binding on the
Guarantor and is enforceable against it in
accordance with the terms of the guarantee.
Meaning of the Rating of the Series 1 Bonds
The rating accorded to the Series 1 Bonds is a final,
public national scale long-term rating. GCR has
reviewed the transaction documentation.
The final, public rating accorded to the Series’ Bonds
relates to timely payment of interest and principal.
The rating exclude an assessment of the Issuer’s
ability to pay any (early repayment) penalties.
Should the rating of the Guarantor, change the rating
of the Series 1 Bonds may also change, but not
necessarily in the same quantum. Likewise, the rating
of the Series 1 Bonds will change in a situation where
the guarantee is retracted,
The first suffix code identifies to which country the
rating relates; ‘NG’ means Federal Republic of
Nigeria; the second suffix code (‘sf’) means that the
rating is of a structured finance nature. A Rating
Outlook indicates the potential direction of a rating
over the medium term, typically a one to two-year
period.
The rating of the Series 1 Bonds will be monitored,
and thereafter GCR will perform regular surveillance
on the transaction. Surveillance reports will be made
available to subscribers to GCR’s information
services.
Rating Criteria application
The methodology used here is the “Global Master
Criteria for Rating Banks and Other Financial
Institutions”, updated March 2017, and Global
Credit-Linked Note and Repackaging Vehicle Rating
Criteria, updated May 2017; these documents (and
any amendments made from time to time) are
available on GCR’s website at globalratings.com.ng.
Information provided
Below is a list of all relevant information required/
provided. Table 5: Nigeria Mortgage Refinance company Plc – Debt Issuance Programme (Series 1) General transaction documents Description of documents Data provided
Issuer’s audited accounts for 2016 Yes
Programme Trust Deed for the Debt Issuance Programme Yes
Base Shelf Prospectus Yes
Supplemental Shelf Prospectus for Series 1 Bonds Yes
Series 1 Trust Deed Yes
Deed of Guarantee Yes
Security Trust Deed Yes
Vending agreement Yes
Master Purchase, Refinance and Servicing agreement Yes
Account Bank/ Paying Agent Agreement Yes
Joint Trustees’ Performance Report on the Series 1 Bonds Yes
Legal opinions on the transaction documents Yes
Disclaimer
Note that GCR is not a legal, tax or financial adviser,
and only provides a credit opinion of the rated
securities. For example, a rating does not cover a
potential change in laws nor can it be regarded as an
audit. Moreover, GCR is not a party to the transaction
Nigeria Bond Analysis | Public Credit Rating Page 6
documents. Users of our credit rating should
familiarise themselves with the transaction (including
the legal opinion), and should form their own views
in this respect. They should not rely on GCR for
legal, tax or financial advice, and are encouraged to
contact the relevant advisers.
Nigeria Bond Analysis | Public Credit Rating Page 7
Figure 1: Transaction structure
Nigeria Bond Analysis | Public Credit Rating Page 8
Year end: 31 December
Statement of Comprehensive Income Analysis 2014 2015 2016
Interest income 686 3,133 5,177 Interest expense (117) (1,105) (2,154) Net interest income 568 2,028 3,023 Other income 47 1 <0.1Total operating income 616 2,029 3,023 Impairment charge - (42) (38) Operating expenditure (456) (1,499) (1,695) Net profit before tax 160 487 1,289 Tax - (5) (13) Profit after tax 160 483 1,277 Other comprehensive (loss)/gain - 238 (428)
Net income 160 720 848
Statement of Financial Position Analysis
Subscribed capital 6,944 6,944 6,944 Reserves (incl. net income for the year) 112 833 1,681 Less: Intangible assets (incl. goodwill) - - - Total capital and reserves 7,056 7,777 8,625
Other borrowings - - - Short-term funding (< 1 year) - - -
Other borrowings 3,509 31,064 31,812
Long-term funding (> 1 year) 3,509 31,064 31,812
Payables/Deferred liabilities 59 218 352 Other liabilities 59 218 352
Total capital and liabilities 10,625 39,059 40,789
Property, plant and equipments 72 149 247 Derivative financial assets - - - Other assets (incl. zero rate loans) 50 196 344 Non-earnings assets 123 345 590
Short-term deposits & cash 10,502 7,369 1,259 Loans & advances (net of provisions) - 1,866 8,104 Bank placements - 14,158 1,443 Marketable/Trading securities - 15,322 29,392
Total earning assets 10,502 38,714 40,198
Total assets 10,625 39,059 40,789
Ratio Analysis (%)
Capitalisation
Internal capital generation 2.3 9.3 9.8
Total capital / Net advances + net equity invest. + guarantees n.a. 416.8 106.4
Total capital / Total assets 66.4 19.9 21.1
Liquidity
Net advances / Total funding (excl. equity portion) 0.0 6.0 25.5
Liquid & trading assets / Total assets 98.8 94.3 78.7
Liquid & trading assets / Total funding (excl. equity portion) 299.3 118.6 100.9
Asset quality
Bad debt charge (income statement) / Gross advances (avg.) n.a. n.a. 0.8
Profitability
Net income / Total capital (avg.) 4.5 9.7 10.3
Net income / Total assets (avg.) 3.0 2.9 2.1
Net interest margin n.a. n.a. 8.6
Interest income + com. fees / Earning assets + guarantees (a/avg.) 10.8 8.2 7.6
Non-interest income / Total operating income 7.7 0.0 0.0
Non-interest income / Total operating expenses (or burden ratio) 10.4 0.1 0.0
Cost ratio 74.0 73.9 56.1
OEaA (or overhead ratio) n.a. 6.0 4.2
ROaE n.a. 6.5 15.6
ROaA n.a. 1.9 3.2
Nominal growth indicators
Total assets n.a. 267.6 4.4
Net advances n.a. n.a. 334.3
Shareholders funds n.a. 10.2 10.9
Total capital and reserves n.a. 10.2 10.9
Total funding (excl. equity portion) n.a. 785.2 2.4
Net income n.a. 349.9 17.7
(Naira in mill ions except as noted)
Nigeria Mortgage Refinance Company Plc
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for 12 months, or as indicated by the applicable credit rating document.
The rating was solicited by, or on behalf of, Nigeria Mortgage Refinance Company Plc, and therefore, GCR has been compensated for the provision of the ratings.
Nigeria Mortgage Refinance Company Plc participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating above was disclosed to Nigeria Mortgage Refinance Company Plc with no contestation of/changes to the rating.
The information received from Nigeria Mortgage Refinance Company Plc to accord the credit rating included the Issuer’s Certificate of Incorporation, Memorandum and Articles of Association, draft risk management policy, draft code of corporate governance and related committee terms, and the audited accounts of the Issuer for 2016, the Trust Deed for the Debt Issuance Programme, the Base Shelf Prospectus, the Series 1 Trust Deed, the Series 1 Supplemental Shelf Prospectus, the Security Trust Deed, the Deed of Guarantee, the relevant legal opinion, the Vending Agreement, the Master Purchase, Refinance and Servicing Agreement, the Account Bank/ Paying Agent Agreement, and the Joint Trustees’ performance reports on the Series 1 Bonds (up to July 2017). In addition, other information specific to the rated entity and/or industry was also received.
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