The Debt Management Office (DMO), on. Monday hosted an investor meeting for the issuance of N300 billion series seven Sovereign Sukuk in Abuja.
The Director-General of the DMO, Patience Oniha, said that since its inception in 2017, Sukuk has become a product of choice for non-interest investors in the capital market.
According to Oniha, the acceptance of the Sukuk is an attestation of one of the major roles of the DMO to develop the domestic capital market, while also raising funds for the Federal Government.
She said that the Federal Government had been able to raise a total of N1.09 trillion through the Sovereign Sukuk since 2017, to support infrastructure development.
The director-general said that for the seventh series, the plan was to raise N300 billion to be used to further finance capital projects.
She recalled that the first Sukuk was issued in September 2017, adding that after extensive marketing, the offer, which was for N100 billion with a tenor of seven years, received a total subscription of N105.878 billion.
She said following the modest success of the first Sukuk and the achievement recorded from Sept. 2017 to Dec. 2023 when the last Sukuk was issued, the DMO had raised a total of N1.09 trillion.
“With this amount, more than 4,100 km of roads and nine bridges across the six geo-political zones in NIgeria and the Federal Capital Territory (FCT) have either been constructed or rehabilitated, ” she said.
Oniha said that the projects had brought substantial benefits, including reduced travel time improved road safety and job creation.
She said that the projects also created improved access to markets for remote farmers, increased access to public services like education and healthcare, and economic development as a whole.
“In addition to those benefits, other reasons for the sustained issuance are the fact that the Sukuk is project-tied, promotes financial inclusion and contributes to the development of the domestic financial market,” she said.
She said that the Sukuk had been well accepted as demonstrated by the level of subscription received in the past.
“Investors get fulfillment of contributing to infrastructure development, and also get a return in terms of income which is paid every six months,” Oniha said.
She said that financial advisers play a crucial role in the issuance of Sovereign Sukuk, assisting the Federal Government of Nigeria through the DMO.
“Their responsibilities include advising on the structure of the Sukuk, managing the offering process, and facilitating investor participation,” she said
Attahiru Machhdo, a representative of Buraq Capital Limited, financial advisers to the transaction, said that the idea of Sovereign Sukuk was informed by the need to bridge the infrastructure deficit in the country.
Machido said that the roads constructed with the proceeds of Sukuk would be effectively supervised to ensure that they meet the required standard.
“The roads must remain usable throughout the lifespan of the Sukuk ”, he said.
Olalade Agboola from Greenwich Merchant Bank, a mandated Issuing House of Sukuk, said that the rental rate was 19.75 per cent.
Agboola said that the tenor of the Sukuk was seven years, adding that the rental rate would be paid bi-annually.
“The bullet payment (principal sum) will be done on maturity, ”she said.
She said that Sukuk was a direct obligation of the Federal Government. (NAN)
