DLM Capital completes milestone payout on sovereign-backed notes

DLM Capital Group, one of Nigeria’s leading development investment banks, has completed the first scheduled principal and coupon payment to investors under its Sovereign Bond-Backed Composite Notes (SBCNs) programme. This milestone moves the instrument from structural promise to demonstrated performance and signals a new chapter for fixed income innovation in Nigeria’s debt capital markets.

The payment, delivered in line with the transaction’s projected cashflow profile, provides early and concrete validation of the credit integrity, structural robustness, and cashflow reliability of a product that attracted measured market scrutiny when it debuted in July 2025, as is typical for genuinely novel instruments entering an established market.

Issued by DLM Funding SPV Plc under a ₦30.00 billion Medium-Term Notes Programme, the Series 1 issuance comprises two tranches: ₦7.30 billion in Tranche A Notes offering a 40.62 percent hold-to-maturity return, and ₦1.70 billion in Tranche B Notes offering a 19.07 percent return.

Both tranches were subsequently listed on FMDQ Exchange. Tranche A has since achieved a distinction that underscores the structural quality of the instrument — it now represents the most valuable AAA-rated corporate bond in the Nigerian capital markets.

That rating achievement is itself a significant part of the story. At issuance, the Notes underwent a transition from the sponsor’s BBB- rating profile to AAA ratings on the instrument itself, conferred by both Global Credit Ratings (GCR) and DataPro Limited.

The upgrade reflects the strength of the structural enhancements, credit protections, and underlying asset quality engineered into the product — a rare and deliberate climb up the credit curve that few new instruments in Nigeria’s market have managed.

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Dr. Sonnie Babatunde Ayere, Group Chief Executive Officer of DLM Capital Group, developed the SBCN structure. It introduces a differentiated fixed income product that combines sovereign bond collateralisation with structured cashflow engineering, designed to deliver enhanced risk-adjusted returns while prioritising capital preservation, predictable cashflow generation, liquidity support mechanisms, and enhanced yield relative to comparable risk instruments.

The combination is purpose-built for institutional investors seeking high-quality fixed income exposure in an environment where the macro and yield landscape continues to evolve rapidly.

Six months post-issuance, the successful first payment represents what DLM describes as a critical inflection point — proof that the structure performs not only in design, but in execution.

Investor reception has strengthened materially following the payment cycle, with growing institutional recognition of the SBCNs as a credible, de-risked, and performance-oriented instrument backed by a disciplined structuring platform and a management team with a demonstrated record of delivery.

With market interest now building toward a Series 2 issuance, the SBCN programme is increasingly being positioned — not just by DLM, but by capital market observers — as more than a successful single transaction.

It is emerging as a new benchmark for what structured fixed income innovation can look like in Nigeria: rigorous in design, transparent in execution, and built to earn the confidence of the institutional investors whose participation will ultimately determine the depth and durability of Nigeria’s debt capital markets.