THE Federal Government has launched a fresh N300 billion Sukuk bond to finance the construction and rehabilitation of roads and bridges across the six geopolitical zones, in a move that will further swell the country’s public debt, now nearing N145 trillion.
The Debt Management Office (DMO) announced this on Monday, May 12, in the 2024 FGN Sukuk Offer for subscription.
In Nigeria, a Sukuk fund, or Sukuk bond, is a type of Islamic investment certificate that represents an ownership interest in a specific asset or a pool of assets, rather than a debt obligation like a conventional bond.
It’s a hybrid instrument that combines equity and debt features, where investors receive income from the use of the underlying asset. The Federal Government of Nigeria, for example, uses Sukuk to fund infrastructure projects like roads.
According to the debt office, the offer opens on May 12, 2025, and will close on May 20, 2025, while the settlement date will be May 23, 2025.
Known as a 7-year Ijarah Sukuk, the instrument would be due by May 2032.
The DMO explained that the offer was being issued by FGN Roads Sukuk Company Plc on behalf of the federal government of Nigeria.
“The Sukuk is structured as a Forward Ijarah (Lease) and offers a rental rate of 19.75 per cent per annum, payable half-yearly, with full repayment at maturity through a bullet redemption,” the debt office stated.
It is noted in the offer document that the proceeds would be used solely for the construction and rehabilitation of key road and bridge projects across the country..
The Sukuk will be listed on the Nigerian Exchange Limited and the FMDQ Securities Exchange Limited, providing liquidity for investors wishing to trade in the secondary market.
A unit of the Sukuk offer is priced at N1,000, with a minimum subscription of N10,000 and subsequent investments in multiples of N1,000, the DMO stated.
It listed the issuing houses for the offer to include Greenwich Merchant Bank Limited, Vetiva Capital Management Limited, and Stanbic IBTC Capital Limited, while the technical advisers are CardinalStone Partners Limited, Lotus Financial Services Limited, and Buraq Capital Limited.
It further listed the receiving banks to include Jaiz Bank, Lotus Bank, Zenith Bank, Stanbic IBTC Bank, and Greenwich Merchant Bank.
The offer is also being marketed by several placement agents, including Access Bank, FBNQuest Merchant Bank, United Bank for Africa, GTBank, Citibank, Standard Chartered, Coronation Merchant Bank, and others.
The federal government has raised about N1.09 trillion through Sovereign Sukuk since the instrument was first introduced in 2017, The ICIR reported recently.
In Nigeria, a Sovereign Sukuk, issued by the DMO, is a financial tool that complies with Islamic law (Sharia). It represents shared ownership in specific assets, mainly used to fund infrastructure projects like roads.
Several important roads across the country have been financed using Sovereign Sukuk bonds, with the DMO and the Federal Ministry of Finance overseeing the process.
The Director-General of the DMO, Patience Oniha, had on March 26, while speaking at an event in Lagos State, hinted at the N300 billion Sukuk offer to finance capital projects.
With the N300 billion Sukuk offer for subscription, Nigeria’s total public debt will further surge from N144.67 trillion reported by the DMO as of December 31, 2024.