January 16, 2018

Mortgage Warehouse Funding Limited to issue ₦20Billion Commercial Paper

Onajite Obrutse

In November 2017, FMDQ approved the registration of the ₦20.00 billion Mortgage Warehouse Funding Limited (MWFL) Commercial Paper (CP) Programme to the platform of the OTC Exchange. The MWFL initiative was created with the objective of providing short-term viable funding to listed member mortgage banks.

It will provide short term financing through the issuance of high quality investment grade and rated Asset Backed Commercial Papers (ABCP) and use the proceeds of its ABCP to fund member mortgage banks’ pipeline of prequalified NMRC conforming mortgage loans. The MWFL will also warehouse the funded mortgage loan portfolios for a minimum of six months to comply with the minimum seasoning period required for refinance by NMRC based on CBN guidelines.

MWFL was incorporated in 2014 and has the Mortgage Bankers Association of Nigeria (MBAN) and CitiHomes Finance Company Limited as programme managers; Lion’s Head Global Partners, London through its African Local Currency Bond Fund as the initial subordinated commercial paper subscribers; and Dunn Loren Merrifield Advisory Partners as financial adviser and arranger.

Unaccommodating interest rates and a lack of definitive foreclosure laws have historically left mortgage uptake in Nigeria at low levels. According to the NMRC in its Mortgage Market System report published in February 2017, the Mortgage to GDP ratio in Nigeria is estimated at 0.6%, as opposed to 2% in Ghana, 31% in South Africa, 32% in Malaysia, 77% in the United States and about 80% in the United Kingdom.

The NMRC and FMDQ continue to express their commitment to fostering the nation’s development by championing and supporting these market-driven strategic initiatives through its Board Listings, Markets and Technology Committee as part of its effort towards unlocking the potential of the Nigerian economy.

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