The Debt Management Office (DMO) yesterday listed the N130 billion sovereign Sukuk on the Nigerian Exchange (NGX) and the FMDQ Securities Exchange.
The Sukuk was initially offered at N100 billion in November 2022 but received overwhelming interest from investors, resulting in an over subscription of N165.25 billion.
To accommodate the needs of this diverse group of investors, N130 billion was allocated. The balance of N35.25 billion will be returned to those subscribers whose offers could not be accommodated after the N130 billion has been listed.
Since 2017, a total of N742.557 billion has been issued in sovereign Sukuk, with the proceeds contributing to the construction and rehabilitation of over 75 Nigerian roads and bridges nationwide.
DMO) in the statement said “the listing on the NGX and FMDQ Securities Exchange will not only expand the range of financial offerings available to investors in the capital market but also provide liquidity and promote price discovery through the opportunity to buy and sell the sovereign Sukuk”.
Listing N130 billion in the NGX and FMDQ means that the federal government is offering investors the opportunity to buy Sukuk bond worth N130 billion. This would allow the government to raise funds that it can use to finance various projects and initiatives.
Listing the Sukuk on the exchange will increase the visibility and credibility of the Sukuk bonds allowing it to attract more investors and potentially increase the value of the bonds.
Sukuk is an Islamic finance instrument that conforms to Sharia law and resembles a bond. Upon acquisition of Sukuk bonds by an investor, the federal government bestows a certificate of ownership.
The invested funds are utilized to provide and secure assets throughout the country, with the investor holding a partial stake in them.
Additionally, the Federal Government commits itself to a contractually binding pledge to repurchase the bonds on a particular future date, and investors receive rental income corresponding to their investment.
As a result of this, the federal government has paid N8.17 billion on rentals for Sukuk bonds in the first quarter of 2023 according to the DMO.
SOURCE: THENATION
