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 a statement, the DMO says it has already appointed Transaction Parties through the Open Competitive Bidding Process for the issuance of the fourth Sovereign Sukuk.
The Sovereign Sukuk is non-interest-bearing security. It is an obligation of the Federal Government of Nigeria (FGN). Similar to other FGN Securities, the Sovereign Sukuk is being issued by the Debt Management Office through the FGN Roads Sukuk Company 1 Plc.
Benefits of a Sovereign Sukuk
1. Regular cash flow as Rental Income will be paid half-yearly to Sukuk Holders.
2. Rental Income is Tax-free.
3. Safe and risk-free investment as they are a direct obligation of the FGN and backed by the full faith of the FGN.
4. Good security for diversification of asset portfolio.
5. Acceptable as collateral for borrowing from banks and other financial institutions.
6. Classified as Liquid Asset by the Central Bank of Nigeria.
7. Listed and traded on The Nigerian Stock Exchange and the Financial Market Dealers Quotation OTC Securities Exchange thereby providing opportunities for Sukuk holders to buy or sell on any business day.
8. Good Investment opportunity for ethical investors.
Editing by Tina Oyinsan