FG N100 BILLION DEBUT SUKUK OFFER OVERSUBSCRIBED

As was expected, the N100 billion seven-year debut Sukuk offer by the Debt Management Office (DMO), which closed last week Friday, has been oversubscribed. Sukuk, a project-tied investment facility attracted investors from across a broad spectrum of the public comprising pension funds, banks, fund managers, institutional and retail investors. Reacting to the pleasant development, the Director General of DMO, Ms Patience Oniha said that the acceptance of the offer was an indication of the viability of the instrument as an investment option as well as a demonstration of utmost faith in the economy.

She commended the federal government and, in particular, the Minister of Finance, Mrs Kemi Adeosun, for the policy support that led to the success of this initial offer which industry watchers accept as another window that has opened for the government to raise funds to fill the nation’s yawning infrastructure gap.

In the run up to the offer, Nigerians developed tremendous enthusiasm as they embraced the investment instrument advertised nationwide through roadshows by officials from the DMO, Ministry of Power, Works and Housing, and Central Bank of Nigeria in Lagos, Port Harcourt, Kano, Abuja and Kaduna.

The awareness campaign which drew attention to the projects sukuk aim at, the construction and rehabilitation of 25 Roads across the six Geopolitical zones, aroused in the investors the patriotic fervour that led to the oversubscription.

Investment experts are optimistic that with this issuance, a new instrument, the Sovereign Sukuk, has been introduced to Nigeria’s capital market, and has added to the variety of products available for domestic issuers and investors.

They pointed out that Sukuk, as a novel investment platform, achieved one of its aims which is to offer new investors an opportunity to participate in Nigeria’s growing capital market.  A look at the investors that subscribed for the Sovereign Sukuk revealed that another significant objective was achieved through the participation of over a thousand retail investors from across the nation who accounted for over four per cent of the total subscription.

With this positive development, the DMO is energised to continue with its role of meeting the Government’s funding needs as well as introducing new instruments to develop Nigeria’s capital market. Also, it is hoped that the success of this offer and the proceeds from it, will enable the Federal Ministry of Power, Works and Housing to commence work on the road projects in earnest.

N100 BILLION SUKUK: STAKEHOLDERS HAILS FG FOR FINANCIAL INCLUSION

Financial investors across the country have commended the federal government over the N100 billion Sukuk, non-interest, unveiled by the Debt Management Office (DMO), in a nationwide roadshow.

Ms. Patience Oniha, Director General of the DMO alongside officials of the Federal Ministry of Power, Works and Housing told stakeholders in Lagos, Port Harcourt and Abuja that the debut N100 billion is dedicated to building critical road infrastructure in the country.

The debut Sovereign Sukuk is an ethical based investment in which rent is based on the investment bi-annually and the principal sum paid at the end of the seven year tenor.

Oniha at the various stops on the roadshow assured potential investors that the Sukuk is backed by the full faith of the federal government and was one of the avenues at which it intends to raise funds for capital projects.

“This is one of several efforts to raise funds for specific projects and this is backed by the full faith of the Federal Government. This is a rental product to cater for segment of our society that requires such services.”

The Assistant Director, Planning and Development, of the Federal Ministry of Power, Works and Housing, Mr. Danlele Yila, listed 25 road projects spread across the six geo-political zones of the country which the N100 billion Sukuk capital will be used.

Some of the projects include the Loko Oweto Bridge, dualization of a section of the Abuja-Lokoja road, dulaization of the Suleja-Minna road as well as the Kano-Maiduguri road.

Others include dualization of the Kkano-Katsina road (Ohase 1), rehabilitation of the Onitsha – Enugu Expressway, and the Enugu-Port Harcourt road (section 1-3), dualization of the Ibadan-Ilorin road (section 2).

Tunde Adama of Citibank, one of the placement agents, who spoke to our correspondent after the first session, expressed optimism on the Sukuk.

“This is a new product which means new opportunities, new investment. I am confident that it would do well same with other financial instruments such as the FGN Bond, Savings bond and the others the DMO has always put on offer.”

The president of Federation of Muslim Women in Nigeria, Rivers State Chapter, Hajia Maimuna Bello, described the offer as a bold initiative to cater for a critical segment of the country, but urged the DMO to deepen its awareness drive.

In Abuja, a former executive director of the NNPC, Ibrahim Waziri, who welcomed the development expressed the hope that the raised funds will be deployed to the listed projects, stressing that as an ethical financial instrument, investors are optimistic of timely rental returns.

Benefits of investing in the Sukuk, according the DMO include; safety, regular income which are tax free and liquidity as they will be listed and traded on The Nigerian Stock Exchange and the FMDQ OTC Securities Exchange Plc.

The product is also useful as collateral to access loans from banks.

The debut Sovereign Sukuk is for N100 billion with a tenor of Seven (7) years, and has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria.

It will be listed and traded on The Nigerian Stock Exchange and the FMDQ OTC Securities Exchange Plc, with offer for subscription slated for September 14.

 

FG LAUNCHES PRE-OFFER ROADSHOW FOR N100 BILLION SUKUK

The Debt Management Office, DMO, today kicked off activities preparatory to the Issuance of the much awaited N100 billion non-interest bearing bond popularly called Sukuk.

 A National Roadshow  led by the Director-General of the DMO, Ms. Patience Oniha, commenced on Thursday, and will visit major cities in Nigeria including, Kano, Kaduna, Lagos and Port Harcourt. The Team will be accompanied by its Financial Advisers, Lotus Capital Financial Services Limited and FBN Merchant Bank Plc.

 The Roadshow is to create awareness about the Sovereign Sukuk and sensitize target investors about the features and benefits of the Sovereign Sukuk.

 The DMO had announced its intention to issue a Sovereign Sukuk in the domestic market as part of measures to fund the 2017 budget deficit.

 Apart from serving as alternative source of funding for the Government, the Sukuk will also serve to diversify the investor base for FGN Securities, promote financial inclusion and deepen the domestic capital market.

 Proceeds from the Sukuk Issuance, according to the DMO, will be used to finance specific road projects. Sukuk are asset-based securities, not debt instruments, and represents ownership in a tangible asset, service, project, business or joint venture.

 This is why Sukuk fits into the DMO debt strategy of borrowing to finance capital projects contained in the budget.

 This ensures that Government borrowings are used to finance development projects which have multiple economic and social benefits for citizens.

 The debut Sovereign Sukuk is for N100 billion with a tenor of Seven (7) years, and  has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria.

 Benefits to be derived from investment in the Sukuk, according the DMO include “safety, regular income which are tax free and liquidity as they will be listed and traded on The Nigerian Stock Exchange and the FMDQ OTC Securities Exchange Plc.”

The product is also useful as collateral to access loans from banks.

 The Offer for Subscription will open in the week after the Roadshow and will be advertised in major newspapers.

 It is expected that the Sukuk will attract huge subscriptions from a wide range of institutional and retail investors including fund managers, associations and groups. 

To make it accessible to a wide spectrum of Nigerians, the minimum amount that an investor can purchase has been fixed at N10,000.00 only. Potential investors are advised to visit www.dmo.gov.ng