From Uche Usim, Abuja
The debt Management Office (DMO) yesterday announced activities preparatory to the issuance of the much-awaited N100 billion non-interest bond, popularly called sukuk.
Sukuk also represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity.
A statement from the DMO, signed by Alfred Akiye, stated that a national roadshow, led by the Director-General of the DMO, Patience Oniha, commenced last Thursday, adding that the team would visit major cities in Nigeria including Kano, Kaduna, Lagos and Port Harcourt.
The team, Ekiye added, would 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 sensitise target investors about the features and benefits of the Sovereign Sukuk,” he said.
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 would 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, would be used to finance specific road projects.
Sukuks are asset-based securities, not debt instruments, and represent 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 tenure of seven years, and has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria,” Ekiye said.
Benefits to be derived from investment in the sukuk, according the DMO, include safety, regular, tax-free income and liquidity, as it would 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,” the DMO said.
It is expected that the sukuk would attract subscriptions from a wide range of institutional and retail investors, including fund managers, associations and groups.