The Debt Management Office (DMO) has made public plans to issue new  Sovereign Sukuk worth between N200 and N250 billion.

This is according to a press release titled “Towards Financing Infrastructure: Debt Management Office to Issue Another Sovereign Sukuk”

This is the highest sum that the Nigerian government would be raising from a single sovereign Sukuk issuance.

What the DMO is saying

The  DMO statement reads;

The Debt Management Office (DMO) is set to issue another Sovereign Sukuk this year for an expected amount of N200 – N250 billion to finance critical road projects across the country.

The DMO commenced the issuance of Sukuk in September 2017 as a strategic initiative to support the development of infrastructure, promote financial inclusion and deepen the domestic securities market. Subsequent to the debut Sovereign Sukuk in 2017 in which N100 billion was raised to finance the rehabilitation and construction of twenty-five (25) road projects across the six (6) geopolitical zones, the DMO issued a Sukuk for N100 billion in 2018 and another for N162.557 billion in 2020. The proceeds of these two (2) Sukuk issuances were also deployed to twenty-eight (28) and forty-four (44) road projects, also in the six (6) geopolitical zones. In summary, a total of N362.577 billion Sovereign Sukuk was issued between September 2017 and June 2021.

Since the debut Sovereign Sukuk in September 2017 whose benefit in terms of improved road infrastructure within and outside cities in Nigeria is clearly visible, the Sukuk has been commended as a viable instrument for financing infrastructure. The use of Sukuk, has enabled timely completion of the designated projects whilst also delivering the multiplier effects associated with construction of capital projects such as roads.”

The transaction parties and their respective roles include;

a. Issuing Houses – Stanbic IBTC Capital Limited, Greenwich Merchant Bank Limited and Vetiva Capital Management Limited.
b. Financial Adviser – BURAQ Capital Limited.
c. Trustees – FBNQuest Trustees Limited and APEL Capital & Trust Limited
d. Legal Advisers – Abdulai, Taiwo & Co. Solicitors and Tsedaqah Attorneys

What is sovereign Sukuk ?

The Sovereign Sukuk is a non-interest bearing security. It is an obligation of the Federal Government of Nigeria (FGN). The Debt Management Office, like other FGN Securities, is issuing the Sovereign Sukuk through the FGN Roads Sukuk Company 1 Plc.

Advantages of Sovereign Sukuk include; Regular cash flow as Rental Income will be paid half-yearly to Sukuk Holders; Rental Income is tax-free; Safe and risk-free investment since they are a direct obligation of the FGN and supported by the FGN’s full faith.