DLM Capital Group, a diversified financial services institution, committed to delivering innovative funding solutions for businesses across key economic sectors, has unveiled its pioneering N30 billion Series-1 Sovereign Bond-Backed Composite Notes (SBCNs).
The N30 billion Sovereign Bond-Backed Composite Note to be issued is a 10-year bond with a triple A rating based on sovereign bond-backed cash flows, and a 49.9 per cent Hold-to-Maturity (HTM) yield.
The DLM SBCNs is the first-of-its-kind public bond structure globally — uniquely combining sovereign bond-backed principal and interest protection with enhanced corporate/consumer loan cash flows to deliver high-yield, AAA-rated returns.
The financial instrument, which represents a bold new chapter in structured finance, as it merges the stability of sovereign instruments with the agility of corporate finance, will redefine Nigeria’s investment landscape and drive credit expansion in under-banked sectors.
Speaking at a recent media parley in Lagos, where the instrument was unveiled, the Group Chief Executive Officer, DLM Capital Group, Dr. Sonnie Ayere, said the revolutionary SBCNs was designed to facilitate financial inclusion by unlocking credit for Nigeria’s underserved markets.
“The SBCNs is focused on de-risking the Nigerian financial market to attract pension funds, development finance institutions and asset managers,” he said, adding that it will also support Nigeria’s non-oil Gross Domestic Product (GDP) diversification through credit expansion.
Dr. Ayere said the new bond structure blends the principal and interest protection of Federal Government of Nigeria (FGN) Bonds with the yield-enhancing cash flows of diversified consumer and Small and Medium Enterprise (SME) loans.
“We believe that the consistent issuance of SBCNs by qualified entities will play a key role in de-risking corporate bond portfolios. By blending sovereign-backed security with enhanced yield exposure, portfolio managers gain a rare opportunity to simultaneously increase portfolio safety and performance,” he stated.
Dr. Ayere emphasised that “DLM’s SBCNs are not just bonds — they are a bridge between safety and performance. By integrating sovereign and private sector credit engines into one tradable structure, it redefines the frontier of income investing.”
He said unlike conventional instruments, the SBCN blends the security of sovereign fixed income with the growth-driven returns of Nigeria’s consumer and small business sectors, creating a dual-engine structure that has not been seen in any traditional debt capital markets issuance to date.
Describing it as a novel in the capital market, Ayere said DLM has created something that is not just safe, but completely ring-fenced and capable of beating inflation and helping investors de-risk their portfolios.
“DLM’s structure appears to be a novel innovation in the debt capital markets – especially within frontier and emerging markets like Nigeria.
“It bridges the risk return gap in a way few, if any, other public market securities globally have done. This has enhanced capital market innovation in Nigeria,” he said.
Rated AAA and offering an attractive Hold-to-Maturity (HTM) yield of 49.9 per cent, the DLM Capital’s SBCNs present a dual-engine investment strategy that bridges sovereign safety with private sector performance.
Ayere listed other unique features of DLM’s SBCNs to include true hybridization of sovereign cash flows (guaranteeing principal + interest) and corporate/consumer loan cash flows (enhancing yield).
He added that the instrument is structured as a public tradable security, not just a fund or private credit vehicle.
It is also backed by an SPV structure for ring-fenced asset and liability management, aimed at buy-side portfolios seeking both credit enhancement and yield uplift — without sacrificing the top rating profile.
“This unique capital structure delivers over twice the returns of standard FGN Bonds or comparable corporate debt instruments with no compromise on credit quality,” Ayere said.
Providing further insight, he stated that the SBCNs align with the aspirations of investors seeking low-risk investments that yield decent returns.
Explanting why DLM came up with the innovation, the Group CEO said current market research confirmed that buy-side investors are increasingly focused on high-growth sectors such as small businesses and consumer lending — sectors that fuel both the demand and supply sides of the economy.
However, capital allocation to these areas requires robust risk mitigation frameworks to preserve principal and ensure returns that are not just economically viable but outpace inflation.
“As a result of these challenges, DLM Capital Group developed an innovative solution: the SBCNs to meet this critical economy needs,” he said, noting that the intervention had been in the works for two years before it was launch.
Also speaking, Group Managing Director of DLM Global Markets, Dr. Babatunde Obaniyi, said the financial instrument addresses the issue of access to finance for SMEs, adding that it will also balance the capital formation process in the Nigerian financial market.
Proceeds from the N30 billion DLM Capital Group’s SBCNs issuance will be used for 50 per cent Federal Government of Nigeria (FGN) Bonds and 50 per cent diversified SME and consumer lending.
