FG to finance key infrastructural projects with N300bn Sukuk bond 

The Debt Management Office (DMO) through the Federal Government has opened a seven-year N300 billion forward Ijarah (lease) Sukuk at a “rental rate” of 19.75 per cent per annum, with the aim to finance key infrastructural projects in the country.  

Sukuk is part of the federal government’s debt instruments used to finance infrastructure, promote financial inclusion and deepen Nigeria’s domestic securities market.

The  Director-general of the DMO, Patience Oniha announced the offer on Monday during an investor meeting for the ‘FGN N300 Billion Series VII Sovereign Sukuk Issuance’.

Speaking at the event, Oniha said the Sukuk qualifies as a security under the Trustee Investment Act and as a government security within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) — making it tax-exempt for pension funds and other qualified investors.

Oniha said the instrument will be listed on both the Nigerian Exchange  Limited and the FMDQ Securities Exchange.

“If you live here and you have a surplus to invest, it is impossible not to find a security that fits you,” she said.

“If it’s not the FGN bond, it will be the Treasury bill. It could be the Sukuk, and if you have pure retail, like a number of salary earners, then you can do the FGN savings bond.

“There’s a variety of products, and what that means is that in terms of stability, the public debt portfolio is stable.”

Oniha assured investors that Nigeria’s public debt remains stable, noting that tax laws reforms will enhance revenue and support long-term debt sustainability.

The director-general said the passage of the tax bills would help boost the country’s revenue.

Oniha said when revenues increase, debt-to-revenue should also drop, and “that should support not just debt sustainability, but overall economic development”.

According to the debt office, the offer — payable biannually — opened on May 12 and will close on May 20, with a settlement date of May 23.

The agency said the minimum subscription for the Sukuk is N10,000 (10 units at N1,000 per unit), and thereafter in multiples of N1,000, making it accessible to a wide range of investors, including individuals and institutions.

The DMO boss listed Greenwich Merchant Bank Limited, Vetiva Capital Management Limited, Stanbic IBTC Capital Limited, and Buraq Capital Limited as issuing houses for the offer.

The organisation said the primary agent banks include Access Bank, UBA, Standard Chartered, GTBank, Zenith Bank, First Bank, Rand Merchant Bank, Lotus Bank, and others.