Nigeria will finally make its N100 billion Sukuk bond debut on September 18, 2017 to enable it raise money for infrastructure funding, the Debt Management Office, DMO officials has confirmed to BusinessDAY.
The debut Sovereign Sukuk is for N100 billion with a tenor of Seven (7) years, and has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria.
The DMO also announced that it has kicked off activities preparatory to the Issuance of the much awaited Sukuk, beginning with a national roadshow on Thursday to be led by its Director-General, Patience Oniha. The team will be accompanied by its Financial Advisers, Lotus Capital Financial Services Limited and FBN Merchant Bank Plc.
The team is expected to visit major cities in Nigeria including, Kano, Kaduna, Lagos and Port Harcourt during the roadshow to create awareness about the Sovereign Sukuk and sensitize target investors about the features and benefits of the Sovereign Sukuk.
BusinessDAY has been told the offer for Subscription which then opens on September 18 will be on for five days till 22, following advertisements in major newspapers. The road show will end on September 14.
“It is expected that the Sukuk will attract huge subscriptions from a wide range of institutional and retail investors including fund managers, associations and groups,” the debt office said in a mailed statement on Wednesday.
Nigeria’s federal government is implementing a record N7.441 trillion budget for 2017 to turn the ailing economy to recovery and growth, amid tight incomes. Total revenue for the 2017 fiscal year was projected at N5.08 trillion, resulting to a projected overall deficit of N2.356 trillion, and representing 2.18 percent of GDP.
The budget deficit is to be financed mainly be borrowing N2.32 trillion, out of which government hopes to source N1.25trillion domestically and N1.07 trillion from foreign sources.
The DMO had announced its intention to issue a Sovereign Sukuk- a non-interest bearing bond- in the domestic market as part of measures to fund part of this budget deficit.
Apart from serving as alternative source of funding for the Government, the Sukuk will also serve to diversify the investor base for FGN Securities, promote financial inclusion and deepen the domestic capital market.
Proceeds from the Sukuk Issuance, according to the DMO, will be used to finance specific road projects. Sukuk are asset-based securities, not debt instruments, and represents ownership in a tangible asset, service, project, business or joint venture.
“This is why Sukuk fits into the DMO debt strategy of borrowing to finance capital projects contained in the budget,”
“This ensures that Government borrowings are used to finance development projects which have multiple economic and social benefits for citizens.
Benefits to be derived from investment in the Sukuk, according the DMO include “safety, regular income which are tax free and liquidity as they will be listed and traded on The Nigerian Stock Exchange and the FMDQ OTC Securities Exchange Plc.”
The product is also useful as collateral to access loans from banks.
To make it accessible to a wide spectrum of Nigerians, the minimum amount that an investor can purchase has been fixed at N10, 000 only. Potential investors are ALSO advised to visit www.dmo.gov.ng.
Onyinye Nwachukwu, Abuja
