The Debt Management Office (DMO) has opened the offer for a
new N250 billion Sovereign Sukuk bond being raised by the Federal Government
for development of road infrastructure across the country.
Investors again jostled for Nigeria’s N250 billion Sukuk
bonds, pushing subscription levels to a record 346 percent, the Debt Management
Office (DMO) said at the weekend.
This is the fourth straight time that Nigeria’s Sukuk will
be oversubscribed since its debut in 2017, to among other things bring in
revenues for road funding, deepen the local debt market as well as financial
inclusion.
“The N250 billion Sovereign Sukuk whose offer opened on
December 16, 2021, closed yesterday December 23, 2021, with an unprecedented
subscription level of over N865 billion. This outcome represents a subscription
level of 346%,” the DMO said in a mailed note.
The N250 billion issuance – the fourth in the series is a
12.80 percent, 10-year Ijara Sukuk due 2031, and will be used to finance up to
71 key economic road infrastructure, specifically identified by the Federal
Ministry of Works and Housing, Federal Capital Territory Administration and the
Ministry of Niger Delta Affairs.
The Debt office did not immediately say how much was
allotted; however, the outcome has successfully closed the N3.145 trillion
domestic debt targets for fiscal 2021.
An analysis of the subscription data by the DMO indicated
high levels of subscription from banks and fund managers (including pension
funds), as well as non-interest financial institutions, ethical funds,
cooperative societies, and retail investors.
“The increasing level of participation by a more diverse and
larger number of investors is a confirmation that the DMO’s objectives of
issuing Sovereign Sukuk to grow the domestic investor base and promote financial
inclusion are being achieved.
“In addition, the high subscription level is a proof of
investors’ acknowledgment of the impact the $362.57 Billion Sovereign Sukuk
issued between 2017 and 2020 has had on the development of road infrastructure
in Nigeria,” the DMO stated.
The DMO further reaffirmed that the proceeds of the N250
Billion Sovereign Sukuk would be used to finance the rehabilitation and
reconstruction of road projects across the six geopolitical zones and the
Federal Capital Territory.
“There is the demand coming from different directions apart
from the history of even the three Sukuk we have issued, and that is why we are
optimistic,” Patience Oniha, director-general, DMO, had told BusinessDay just
on Tuesday ahead of the close of the deal.
“The New Domestic Borrowing for budget deficits for 2021
(including the Supplementary Budget) is N3.145 trillion out of which we have
raised N2.895 trillion leaving an outstanding of N250 billion. This is what we
want to issue as Sukuk.”
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