The federal government has been urged to redeem its guarantee on the Series 3 Bond which is maturing on May 24, 2015, with an obligation to pay N24.564 billion to note holders.The president of the Real Estate Developers Association of Nigeria (REDAN), Rev Ugo Chime, who stated this yesterday, said passing the buck to the Federal Mortgage Bank of Nigeria (FMBN) at this stage will not augur well for the country.Chime stated that the FGN guarantee for the mortgage-backed bond is irrevocable and unconditional, therefore, the federal government has to redeem its guarantee as failure to do so will cause the bond market and FGN reputational damage.

President Olusegun Obasanjo had in 2007 initiated the much-celebrated federal government’s N100 billion five-year tenor mortgage-backed bond with the desire to ensure the success of the sale of the federal government’s non-essential residential houses in the Federal Capital Territory to public servants under the monetisation policy of that administration. The FMBN and its issuing house sold the first tranche of N26 billion in 2007. Impressed with the outcome, Messrs FMBN SPV Issuer Limited, in 2012, issued another N6 billion notes by way of private placement to qualified institutional investors.

The Series 2 fixed rate notes issued under the N100 billion residential mortgage-backed securities programme, which is sponsored by the FMBN, is 100 per cent guaranteed by the Federal Government of Nigeria. An application will be made to list the Series 2 notes on the Nigerian Stock Exchange. Come May 24, 2015, the Series 3 bond will be maturing with obligation to pay N24.564 billion to note holders and failure to do so at maturity will lead to the call of the FGN Guarantee that backed the transaction. Chime said that such an action will not be good for the country in local and offshore financial circles.


(Visited 1 times, 1 visits today)