FG Launches Pre-offer Roadshow for N100bn Sukuk

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Ndubuisi Francis in Abuja

The Debt Management Office (DMO) will today jump-start activities preparatory to the issuance of the much-awaited N100 billion non-interest bearing bond, otherwise known popularly as Sukuk.

A national roadshow led by the Director-General of the DMO, Ms. Patience Oniha, would commence today and traverse major cities in the country, including, Kano, Kaduna, Lagos and Port Harcourt.

The team 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 its features and benefits.
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. Sukuk 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 tenor of seven years, and has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria.

The DMO in a statement noted that the benefits to be derived from investment in the Sukuk include “safety, regular income which are tax-free and liquidity as they will 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 would open in the week after the roadshow and would be advertised in major newspapers.
It is expected that the Sukuk would attract huge subscriptions from a wide range of institutional and retail investors including fund managers, associations and groups.

To make it accessible to a wide spectrum of Nigerians, the minimum amount that an investor can purchase has been fixed at N10,000.00 only.
The DMO advised potential investors to visit www.dmo.gov.ng.