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

 

 

DMO SOLICITS MEDIA IN DEBT MANAGEMENT

The Director General of the Debt Management Office (DMO), Ms. Patience Oniha, has solicited the support of the media in informing Nigerians on the management of the country’s debt stock and government’s drive towards infrastructural development.
Oniha, who made the call in Lagos weekend when she met some editors, gave the assurance that the DMO will continue to be in the forefront of openness and engagement with the media so that Nigerians will be better informed.
 The DMO boss used the breakfast meeting to explain that her leadership, “will focus on loan repayment and loan utilisation to ensure proper implementation of Nigeria’s budget’’.
 She told the editors that the agency intends to clear debt repayment plans as well as bridge the gap between revenue and expenditure occasioned by drop in global price of crude.
 “For many years, the government had operated a deficit budget aimed at stimulating economic growth, because the revenue was less than expenditure.
 “DMO will support the government to bridge the gap between revenue and expenditure,’’ Oniha said.
 On why the federal government has continued to raise capital from the market, she explained that the focus on capital projects was a deliberate strategy to turn around the economy and boost infrastructural development.
 “That is why government’s focus is on borrowing. We need to upscale things so as to achieve goals of government.”
 Taking questions on why the government was going to refinance Treasury Bill stock with a proposed $3billion foreign loan, the DMO DG said: “As most of you know, the treasury bill notice is in the public domain. Treasury bills are issued for a tenor of 364 days’ maximum and the discount rate is about 18% to government. When you compare that to the rate of six to seven percent in the international market you realize straight away that there is a huge savings of 11 to 12 percent which is what we are trying to take advantage of.
 “It is not a new borrowing so it is not going to increase our debt stock. It is simply converting some of our naira debts to US dollars at a longer tenor and at a lower cost.”
 Remember the point that I made of the benefits of doing that is longer tenor and cheaper rate. By the time that borrowing in U.S dollars is due for repayment, several of the initiatives and policies of government would have materialized so you are not looking at repaying in one or two years. The naira is either stronger at exchange rate or at best remain at the level we have now.”
Most of the editors who spoke at the meeting assured the DG of the support of the media and expressed the hope that they will be frequent engagements so that they could properly inform Nigerians on the activities of the DMO.