This new bond structure, described as a first-of-its-kind public market instrument, blends the principal and interest protection of Federal Government of Nigeria (FGN) Bonds with the yield-enhancing cash flows of diversified consumer and SME loans.

Rated AAA and offering an attractive Hold-to-Maturity (HTM) yield of 49.9%, the DLM Capital’s SBCNs present a dual-engine investment strategy that bridges sovereign safety with private sector performance.

Dr. Sonnie Ayere, chairman of DLM Capital Group, speaking at a press conference where the novel business idea was unveiled, disclosed that the instrument was designed to facilitate financial inclusion by unlocking credit for underserved markets in the country.

He said,

“The Sovereign Bond Backed Composite Notes is focused on de-risking the Nigerian financial market to attract pension funds, development finance institutions and asset managers. It will support Nigeria’s non-oil GDP diversification through credit expansion.”

“We believe that the consistent issuance of SBCNs by qualified entities will play a key role in de-risking corporate bond portfolios. By blending sovereign-backed security with enhanced yield exposure, portfolio managers gain a rare opportunity to simultaneously increase portfolio safety and performance,” he added.

“DLM’s SBCNs are not just bonds — they are a bridge between safety and performance,” said a spokesperson from the firm. “By integrating sovereign and private sector credit engines into one tradable structure, it redefines the frontier of income investing.”

Backed by an SPV structure to ensure asset and liability ringfencing, the bonds are positioned for institutional portfolios, particularly pension funds, DFIs, and asset managers seeking enhanced yield within stringent risk parameters.

The initiative is also expected to support Nigeria’s financial inclusion goals and non-oil GDP diversification through expanded access to consumer and SME credit.

Market analysts see this innovation as a critical advancement in capital market instruments, especially within frontier economies where risk-adjusted returns have traditionally been harder to structure effectively.

The issuance signals a transformative step in leveraging capital markets for broader economic impact, enabling safer, high-yield investments while catalyzing growth in Nigeria’s underbanked and high-growth sectors.

Why is DLM’s SBCNs Unique?

See:

The upgrades are as a result of an improvement in the Group’s credit risk and liquidity risk management.

DLM Capital Group had its “A” rating upgraded to “A+” in October 2023 by DataPro with a stable outlook.

The rating agency expressed that the upgrade was supported by DLM’s good revenue profile, good asset quality and experienced management team.

Pan African credit rating agency, Agusto & Co. in its rating assessment said DLM Capital Group’s rating was upgraded based on its strong brand, and expertise in structured credit, low leverage, acceptable profitability, with a competent and experienced management team. Agusto, in November 2023, also upgraded the company to a “Bbb” rating with a stable outlook from a previous rating “Bbb-” on account of improvement in credit risk and liquidity in risk management.

DLM Capital Group is a Development Investment Bank (DIB) with subsidiaries namely: DLM Advisory, DLM Asset Management, DLM Securities, CitiHomes Finance Company, DLM Nominees, DLM Trust Company, Sofri Bank (LINKS MFB), and DLM FX. The Group provides innovative solutions to economic and social developmental challenges that impact the everyday lives of people.

The CERPAC N25 Billion Securitization Programme is a five-year bond issuance created in May 2017 when Continental Transfert Technique Limited (“the Sponsor”, “the Seller”) sponsored the incorporation of the special purpose vehicle, to raise funds in connection with the funding program for the purchase of current and future receivables accruing to the seller from the sale of the Combined Expatriate Residence Permit and Alien Cards (CERPAC Cards) in Nigeria.

CERPAC Receivables Funding SPV is unique in the sense that the only metric that informs the success of the company is the performance of the purchased CERPAC Receivables, which in turn are used to service the SPV’s debt obligations.

Since its creation in 2017, CERPAC has had four issues: the first N4.877Bn 5-year 18.25% Discrete Bond due 2023, the N12.5Bn 5-year 15.25% Series 1 bond due 2023, N1.600Bn 5-year 15.5% Series 2 bond due 2023, and the N1.250Bn Series 3 bond due 2028. In November 2019, an asset backed commercial paper of about N2.87billion was issued and fully repaid in June 2020. On the 15th of January 2023, the Discrete N4.8Bn and Series 1 N12.5Bn matured and were fully paid.

Upon the final payment of both the Discrete and Series 1 bonds, DLM also refunded the total sum of N2.3Bn kept in the Reserve accounts to Continental Transfert Techniques Limited.

Since the course of the CERPAC transaction, DLM Capital Group had raised about N23.011Bn and paid a total sum of N31.144Bn covering both Principal and coupons to date.

 The CERPAC Series 2 and 3 bonds will mature on 15^th July 2023 and 15^th July 2028, respectively.

Mr. Sonnie Babatunde Ayere commented as follows, “the current collateral cover to the remaining investors in Series 2 & 3 as at December 2022 was 34.5x, average DSCR (including principal) is approximately 4x and current credit enhancement is 64.17%. Based on these facts, the rating agencies should have re-rated the deal for an upgrade”.

This was the first ever SEC approved combined offer, which allowed the SPV to issue both debt & equity at the same time and from the same prospectus to investors. Whilst the debt has performed fantastically well, so has the equity. The equity investment returned year-on-year, an average of 55.65% per annum beating most market indices, appreciating from N50 a share to N189 a share as of December 2022. Finally, whilst this transaction was initially frowned upon by real money managers in 2017, we were glad to note that at final redemption, a big chunk of the paper was finally held by the Funds as they had come to find comfort from its fantastic performance and transparency”.

– Sonnie Babatunde Ayere

DLM Advisory, headed by Mr. Emeka Ngene, the Group’s investment banking subsidiary, acted as the Issuing House on the deal while DLM Trust Company Limited, the Group’s Trustee subsidiary, was the Lead Bond Trustee. The Managing Director, DLM Trust Company Limited, Mrs. Ololade Razaaq remarked that the receivables had posted very strong cashflows over the last decade till date.

“Since the inception of the programme, there have been no record of delinquency or default as all investors received their principal and full coupon as and when due. This was also the first transaction in Nigeria to provide investors with a 100% transparency by providing investors with detailed monthly performance reports”.

Other successful securitization transactions executed by DLM Capital Group include the Primero BRT Securitization, the MAX Receivables Securitization SPV Ltd and the NMRC Pass-Through transaction which is still ongoing.

Sofri recently trended on Twitter for its uptime and optimal services to the customers. Well, could it be because the player is relatively new in the block with fewer customer base since it was launched only about a year ago?

In this interview, Barnabas Okwudibie, the Chief Operating Officer of Sofri powered by Links Microfinance Bank, a subsidiary of DLM Capital Group, expatiate on how they did it and the plans for the future after hitting 60,000 customer base in just seven months; insisting that Sofri as a Lifestyle Digital Bank is prepared for Africa-wide expansion.

Barnabas spoke to Peter Oluka:

For the sake of our reader, kindly, tell us a brief of your background

My name is Barnabas Okwudibie, the Chief Operating Officer of Sofri powered by Links Microfinance Bank, a subsidiary of DLM Capital Group.

Links Microfinance Bank launched Sofri Bank a few months back; What has been the penetration rate (in the market)?

Thank you for this question. It has been a great journey actually. Like you rightly said, Links Microfinance Bank was acquired by DLM Capital Group about two years ago and we went ahead to launch Sofri Digital Bank last year. Since then, we have been able to prove to the markets our intentions; today, our customers trust us. We’ve been able to come up with innovation around the digital banking lending space. We built a one stop shop for our customers to bring banking closer to them. Despite that glorious journey we believe there’s too much to do when we look at the Nigerian market.

What are the unique offerings of Sofri digital Bank?

Sofri offers bespoke digital banking experience. We do both online and offline lending. By online lending, we lend via our digital mobile app.

We also loan to customers in the public service and the private organisations. Our customers have access to transfer money with ease. They can make multiple transfers at the click of a button. We are one of the few banks in our space that offer this service.

Aside from that, you can make payment with Sofri via a card which is our ATM card. It is very effective. The downtime is about zero. So you can enjoy prominent banking with ease; top up data or recharge, pay utility bills on the Sofri app.

Looking at the elephant in the room: The cashless policy implementation by the CBN/banks was greeted by cries by many Nigerians. Is it that the people are not prepared or the technology is not robust enough. What do you think led to the transactions’ failures?

For me, I’ll take that question from a personal perspective. So, the cashless policy has very good objectives. However, considering where we are, we must have observed some issues in the implementation. It is a learning curve for Nigeria; the regulators, the operators, and other stakeholders in the system. I can’t say the policy has failed; it is just that we keep learning and improving the system. We see areas we have to make-up and ensure that everything goes well. We operators in the banking sector need to ensure that yes, we have good technology in place to be able to serve the customers while the public should quickly embrace the cashless policy, embrace the use of technology to improve the transactions.

The other aspect is the enlightenment of the people. I don’t think if the regulator had carried out enough orientation for the people, probably we should have experienced less issues.

Links Microfinance Bank through Sofri rolled out a campaign at the heat of the cashless policy implementation challenges. The reward campaign in which 100 customers get 10,000 a week. Tell us more about it?

Sofri is a lifestyle digital bank. We are proud to be one of the banks in Nigeria that give back to the customers. What we have decided to do is to see that we have encouraged the under-digitized population in the market. When they come to us to open an account we are able to ‘give back’ to them.

So, we thought of the best way to do this which gave rise to the reward promo. Just download the app on the iOS or Google Play Store to create and account, you qualify for a raffle. The raffle is done every Thursday by 12 Noon.

Just follow us on social media for a live stream. Once you are among the winners you get credited N10,000. We have been doing this for the past three weeks which has been a wonderful experience. We roll out N1 million every week.

You know we are talking about cash crunch; do you give the winners cash or it is transferred to their Sofri account?

They get credited instantly via the account they provided. We want to encourage more people to embrace digital payment. They are also encouraged to get the Sofri ATM card for cash withdrawal. It is a very transparent process and everything is Live streamed on social media.

What’s been the feedback from the customers (winners) so far?

It has been wonderful. Like I said earlier, in our society today people want to trust institutions to do business with them. The customers who have won from the raffle exercise have given good testimonials about the bank and they’ve come to understand that yes, it’s not just having an account with Sofri, they cherish the relationship. The Sofri Bank account holders see themselves as part of this family. We take feedback from them on areas we need to improve. We made our platform very interactive.

What is the spread of the (promo) customer participation because when it comes to financial inclusion, most times, rural dwellers are not adequately covered?

The spread of this promo is nationwide (from every location in Nigeria). We’ve seen customers calling us from the Southern part of Nigeria and from the Northern part. It is exciting. Sofri brand, our vision is to see that we can grow from Nigeria to other Sub-Saharan African countries. So, we’re not restricting ourselves to just Lagos.

The promo is open to everyone in Nigeria. Our push, like you said, is to see that we take care of the unbanked.

That is why we’ve made our process so simple. We leverage innovative technology to see that we get more people into the Sofri Bank ecosystem irrespective of where they are. Our customer acquisition has been top notch. Sofri Bank’s customer base has grown to around 60,000 in less than a year. The transfer success rate on the app is around 99%.

This round was led by FBNQuest, supported by UCML, DLM Advisory and Afrinvest.

The 180-day-tenor Series 10 and 268-day-tenor Series 11 were both issued on the 18th of January 2023 with maturity dates of July and October 2023, respectively.

Sonnie Babatunde Ayere, Group CEO, of DLM Capital Group noted “We are thrilled with the overwhelming investor demand and confidence for this financing. This issue will significantly bolster the company’s treasury and has provided a solid foundation for DLM to grow by making funds available to our domestic companies in a variety of sectors and consumers seeking everyday loans. As always transparency is key so, we also look forward to updating investors on our progress in the coming months.”

Founded in 2009, DLM Capital Group has expanded from its initial investment banking forte to include trusteeship, securities sales and trading, asset management, foreign exchange sales and trading, corporate lending, nominees, and digital banking.

DLM Capital Group Limited is a diversified financial services institution comprised of brands such as DLM Advisory, DLM Asset Management, DLM Securities, DLM FX Trading, DLM Trust Company Limited, CitiHomes Finance Company, and BankSofri. DLM has an investment grade rating from all 3 rating agencies.

The ₦1.24bn Series 1, ₦1.01bn Series 2 and ₦1.27bn Series 3 Commercial Papers, which were all issued via and quoted on the FMDQ Securities Exchange, matured on the 31st May 2022, 29th August, 2022, and 12th August 2022 respectively. 

In line with best practice, the FMDQ has been informed of these redemptions. With a successful outing, the three Series garnered investments from a variety of investors ranging from Pension Fund Administrators, Asset Managers, Insurance companies and Banks.

Commenting on the successful redemption, the GCEO of DLM Capital Group, Mr. Sonnie B. Ayere, said, “We are pleased to have fully repaid all the investors in the Series 1, Series 2 and Series 3 CP issuances. We thank all our investors for their participation and reiterate our commitment to being a counterparty that can be relied on for the long term; we have been around for 13 years, and we will continue to contribute our quota to Nigeria’s development”.

He further added that “these redemptions reflect DLM’s capacity to meet its financial obligations as at when due and we intend to remain an active issuer in the commercial paper market.”

The Group comprises the following businesses: retail banking via our digital channel SoFRI, consumer & business lending, asset management, investment banking, trustees, securities trading and foreign exchange.