The Federal Government through the Debt Management Office (DMO) has announced the sale of its second tranche seven-year N100 billion sovereign Sukuk, with the offer expected to close on December 17, 2018.
The bond, which is aimed at funding road infrastructure across the six geo-political zones, is payable semi-annually for seven years and is at a rental rate of 15.74 per cent to be due in 2025.
She further added that the main objective of the second Sukuk issue is to sustain the rehabilitation and construction works on 25 key economic roads in the six-geopolitical zones with three roads now added for more reach.
“The success of the issuance of the first N100 billion Sukuk bond shows that the current administration is currently working round the clock to revamp the economy. The government is still spending a lot of capital, though we are not yet in the best place, we are in a good place. We want to see much more enthusiasm from the private sector as well as retail participation which stood at five per cent.
Borrowing is still going on but we want to have a stable portfolio but beyond borrowing, funds from the Sukuk bonds are strictly for capital projects especially road infrastructure. “
Oniha said debt levels remain moderate; adding that the increasing debt service is being managed by growth in revenue through the government’s efforts in engaging revenue mobilization initiatives aimed at encouraging tax payers to regularise their tax status.
According to her, the 2017 N100 billion Sukuk which was 5.8 per cent over-subscribed, ensured execution of road projects across all regions of the country, affirmed investors’ confidence and created jobs around the country.
Also speaking on the issuance of the Sukuk II offer, Deputy Managing Director, FBNQuest Merchant Bank Limited said Mr Taiwo Okeowo said, ‘‘we are happy to be participating in this initiative which will contribute to narrowing the country’s infrastructure deficit. With the issuance of the first Sukuk offer, we were able champion a robust investment drive – a demonstration of FBNQuest Merchant Bank’s strong distribution capacity.”
Subscribers could purchase N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter with FBNQuest and Islamic wealth manager, Lotus Capital managing the sale.
The DMO said it qualified as securities in which trustees could invest under the Trustee Investment Act and as government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds. It will also be listed on the Nigerian Stock Exchange (NSE) and on FMDQ Over-The-Counter (OTC) platform and be classified as liquid asset by the Central Bank of Nigeria (CBN).
Source: Kehinde Akinsehinde-Jayeoba