Nigeria's government lists 163 bln naira sovereign sukuk

Published 22 Mar,2021 via The Nation - The Federal Government has listed its N162.56 billion Sukuk on the Nigerian Exchange (NGX) Limited, paving the way for investors to trade on the non-interest bond.

The Debt Management Office (DMO), which oversees Nigeria’s government debt issuances, listed the N162.56 billion, Seven-Year, FGN Ijarah Sukuk with a rental rate of 11.20 per cent. Issued on June 16, 2020, it was the third sovereign Sukuk to be issued by the Federal Government.

The net proceeds were earmarked for the rehabilitation and construction of key economic road projects across the six geopolitical zones in the country.

With this listing, members of the general public who invested in the 2020 Sukuk bonds can now sell their investments and those who wish to invest in Sukuk can now do so.

Director General, Debt Management Office (DMO), Ms. Patience Oniha said it was exciting that the trading of the Sukuk is now permissible having fulfilled the condition for listing stipulated by the Financial Regulatory Advisory Council of Experts (FRACE) of the Central Bank of Nigeria (CBN).

“The FGN Sukuk may only be listed for trading on relevant exchanges after the commencement of works on the road project for the construction of the Sukuk assets. This is in order to create a pool of assets consisting of non-financial and financial assets that could be freely traded while avoiding the prohibition of dealing in interest-based transactions arising out of sale of debt and exchange of currency not at par,” Oniha said.

NGX Limited stated that the listing of the third Sovereign Sukuk would provide exit opportunity for existing investors and further deepen the Nigerian capital market, particularly, the relatively nascent Sukuk market.

According to the Exchange, the issuance and subsequent listing of the sovereign Sukuk on the NGX underscore the Federal Government’s drive for the development of critical infrastructure needed to unlock economic growth, by leveraging innovative and cost-effective financing structures.

“The Exchange continues to deliver on its commitment to provide a platform for issuers and investors to meet their investment objectives. By enhancing access to the Federal Government and the private sector, NGX has promoted and supported the growth of the debt market in Nigeria with listings worth over N2.6 trillion in 2020,” NGX stated.

Nigeria’s N150 billion third sovereign Sukuk issuance had recorded oversubscription of N519.12 billion, sustaining a trend of oversubscription that started with the maiden issuance 2017. The Federal Government had in June 2020 issued a N150 billion seven-year Ijarah Sukuk due June 2027 with approximate rental of 11.200 per cent per annum.

The Federal Government had in September 2017 floated its first sovereign Sukuk, a N100 billion seven-year issue with a rental rate of 16.47 per cent. It was oversubscribed by 5.8 per cent. Government followed in 2018 N100 billion seven-year tenored Sukuk Al Ijarah (Lease) with annual rental rate of 15.743 per cent. It was also oversubscribed.

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