FG To Float 2nd Tranche N100bn Sukuk Bond By Year-end – DMO
The Director-General, Debt Management Office, DMO, Ms. Patience Oniha, Thursday, indicated that the second tranche of N100 billion Sukuk bond would be floated before end of 2018.
Sukuk or Islamic bond is a financial instrument structured to generate returns to ethical investors without infringing on the Islamic law, which forbids interest payments on loans.
Oniha said that DMO had made significant progress to ensure successful issuance of the bond before year end.
“June was when the budget was approved and Sukuk is a project that was also approved in the budget. We will float it; we have made significant progress; we will issue it this year,” she said.
According to Oniha the second tranche would be specifically for infrastructure development just like the first one issued in September 2017.
Oniha said that DMO was working with Ministry of Power, Works and Housing on the projects earmarked for the second tranche of the bond. She said that the successful outcome of the first tranche made the Federal Government do more to strengthen infrastructure development.
She also expressed optimism that the second tranche would be oversubscribed based on the feelers from investors and the public. Oniha stated: “We still have auctions regularly, we issue FGN Bonds and they have been oversubscribed. So, whether liquidity is tight or not, we have got good demands. Don’t forget we are selling good products when we do Treasury Bills and FGN Bonds. But in terms of Sukuk, I think from the feelers we have got from investors and the public, it is a product the people want to associate with.”
The federal government in September 2017 issued a seven-year N100 billion maiden Sukuk bond. It was offered at N1,000 per unit (minimum of N10,000 or 10 units) as a regular bond but representing ownership interest in the asset to be financed rather than a debt obligation. Some of the roads funded by the bond include the Ibadan-Ilorin Road, Kolo-Otuoke-Bayelsa-Palm Road, Enugu-Port/Harcourt Road, Kaduna Eastern By-Pass, Kano-Maiduguri Road and Loko-Oweto Bridge over River Benue, among others.
