It is the Banks prime function. The operation is designed for the FMBN to issue mortgage related debt securities (under FG guarantees and other incentives) to raise capital market funds at low costs for sustained liquidity in both Nigerias secondary and primary mortgage markets. Such debt instruments are targeted at institutional investors, pension funds, insurance companies and their life funds, consolidated universal banks, etc.
The funds so raised are channeled by wholesale mortgage on-lending by the Bank at market rate (via secondary mortgage transactions) to end-users particularly home loan originators (PMIs & universal banks) and housing estate developers. The proceeds of the capital market operation are also for funding the Banks Mortgage Refinancing Window.
The operation is pursued to also strengthen the primary mortgage market as a platform for the emergence and development of a viable secondary mortgage market in the country.
Our capital market instruments for use now and in future include:
- Issuance of securities tied to FMBN assets;
- Sale of Promissory Notes based on FGN Guarantees to source funds for on-lending through rated mortgage originators;
- Securitization of mortgage assets surplus to its portfolio requirements to raise funds to finance both the primary and secondary mortgage markets; and
- Sale of certificates of deposits to raise funds from investors including financial institutions. Such instruments though long-tenured could be rediscountable with the support of the Central Bank of Nigeria.