DLM Capital Repays N20.161bn Taken from Bond Investors

By Aduragbemi Omiyale

The bond investors involved in the N25 billion CERPAC SPV securitization of DLM Capital Group have been repaid a total of N20.161 billion.

The CERPAC N25 billion Securitization Programme is a five-year bond issuance created in May 2017 when Continental Transfert Technique Limited 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.

In a statement from DLM Capital, it was disclosed that the redemptions of the N21.161 billion were for the discrete and series 1 bonds executed by the organisation.

Since its creation in 2017, CERPAC has had four issues: the first N4.877 billion 5-year 18.25% discrete bond due 2023, the N12.5 billion 5-year 15.25% Series 1 bond due 2023, N1.600 billion 5-year 15.5% Series 2 bond due 2023, and the N1.250 billion Series 3 bond due 2028.

In November 2019, an asset-backed commercial paper of about N2.87 billion was issued and fully repaid in June 2020, and on January 15, 2023, the discrete N4.8 billion and Series 1 N12.5 billion matured and were fully paid.

Upon the final payment of both the discrete and series 1 bonds, DLM also refunded the sum of N2.3 billion kept in the reserve accounts to Continental Transfert Techniques Limited.

Since the course of the CERPAC transaction, DLM Capital Group has raised about N23.011 billion and paid a total sum of N31.144 billion, covering both principal and coupons to date. The CERPAC Series 2 and 3 bonds will mature on July 15, 2023, and July 15, 2028, respectively.

“The current collateral cover to the remaining investors in Series 2 & 3 as of December 2022 was 34.5x, average DSCR (including principal) is approximately 4x and current credit enhancement is 64.17 per cent,” the chief executive of DLM Capital, Mr Sonnie Babatunde Ayere, said.

Speaking further, he disclosed that, “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 and 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 cent 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.”

On her part, the Managing Director of 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 has 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 100 per cent transparency by providing investors with detailed monthly performance reports,” she stated.