DMO, Investors, Others Unveil N150bn Sukuk, Applaud Transformative Value

*Issuance to end October 13Ndubuisi Francis in Abuja

The Debt Management Office (DMO), investors, transaction partners and other stakeholders yesterday, unveiled the N150 billion 2023 Ijarah Sukuk, a 10-year-tenored sovereign instrument which was designed to narrow the gap road infrastructure.
Sukuk is a non-interest, asset-backed instrument, based on the principles of Islamic finance, and was introduced in the road infrastructure funding mix in Nigeria in 2017.

Speaking at the Series VI Investor meeting on the N150 billion debt instrument, the DMO Director General, Ms. Patience Oniha, highlighted several measures taken by the last administration to boost road infrastructure, adding that despite such steps, the expectations of Nigerians were not met because of the existing gap.

The meeting was attended by investors, various industry regulators and other stakeholders
According to her, solid economic growth cannot be guaranteed under an environment with poor infrastructure, stressing that many businesses that relocated to neighbouring countries like Ghana did so because of poor infrastructure.

She noted that it was in a bid to stem the tide that the Sukuk funding initiative was introduced in 2017, to help fund road infastructure, stressing that infrastructure has a humongous multiplier effect on an economy and generates sufficient amount of employment.
As a great enabler, Oniha observed that the federal government decided to continue with the Sukuk financing mechanism because of the transformative impact it had brought to the nation’s road infrastructure space.

She cited three flagship road/bridge projects with the imprimatur of Sukuk in the financing arrangement as Lagos-Ibadan Expressway, Second Niger Bridge and the Abuja-Kaduna-Kano Road.
Noting that the footprints of the Sukuk road financing arrangement were visible across the six-geopolitical zones of the country in terms of quality and certainty of completion, Oniha urged investors to avail themselves of investing in the N150 billion.

She assured that Sukuk was not only a sovereign but a liquid instrumented, and fully guaranteed by the Federal Government of Nigeria (FGN).
The DMO had on Tuesday, announced the offering of N150 billion Ijarah Sukuk bonds for subscriptions.

The ten-year bonds are offered at 15.75 per cent rental per annum and will be due in October 2033.
The bonds offered at N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter, would close on October 13, 2023.
According to the DMO, the issuance was under the local loans (Registered Stock and Securities) Act, CAP. L17, on the authority of the Federal Government of Nigeria FGN road FGN Road Sukuk Company (FGN RSC 1).

Greenwich Merchant Bank Limited, Stanbic IBTC Capital Limited, and Vetiva Capital Management Limited were authorised to receive applications for the N150 billion10-year Ijarah Sukuk due October 2023 at a rental rate 15.75 per cent per annum.
The Transaction Adviser to the issuance is Buraq Capital Limited. At the end of subscriptions for the N150 billion Sukuk, the total Sukuk financing pool would have rallied to N892.56 billion.

Between 2017 and 2022, Sukuk issuance had provided N742.56 billion to finance road projects nationwide