The FMDQ OTC Securities and Exchange, on Tuesday listed the first sovereign Federal Government N100 billion Sukuk bond aimed at tackling infrastructure development on its platform.
Ms Patience Oniha, the Director-General, Debt Management Office (DMO) said at the listing programme in Lagos.
She said the seven-year bond at 16.47 per cent due by 2024, was packaged on behalf of the government by DMO and the Ministry of Finance.
Oniha said the bond was issued to develop and enhance quality of life and business activities in the country.
“The DMO in pursuit of its objectives to diversify the sources of government funding and deepen the domestic capital market, successfully issued the debut N100 billion seven-year Sovereign Sukuk on Sept. 26, 2017.’’
She said the proceeds of the issuance of the Sukuk would be used to construct and rehabilitate ear-marked roads across the six geopolitical zones of the country.
According to her, the purpose of the Sukuk is to integrate ethical investors into the domestic securities market.
She said the bond was floated to establish a benchmark for pricing of Sukuk by other domestic issuers and offer investors the opportunity to earn returns, while contributing to the infrastructure development of the country.
Oniha said the proceeds were being deployed for the construction and rehabilitation of 25 key economic roads projects across Nigeria’s six geopolitical zones.
“The listing of the sovereign Sukuk on FMDQ will provide investors with the much needed transparent and efficient platform for price determination and liquidity,” she said.
Oniha said the Sukuk Bond was an infrastructure bond, noting that people that invested in the bond, invested for the future.
She stated that the bond was initiated to boost the financial inclusion programme of the government to reach out to the unbanked people.
Oniha, however, assured all parties that the funds would be utilised judiciously.
She said DMO had commenced inspection of the various projects earmarked for the fund.
Mr Emmanuel Etaderhi, Senior Vice President, Economic Development Division, FMDQ congratulated the issuer and co-sponsors to the issue, stating that the issuance would further deepen the domestic Debt Capital Market (DCM).
Etaderhi said the issue would increase the range of investible debt securities in the markets, invariably contributing to the development of the nation.
According to him, the listing of the Sukuk on FMDQ will rightly position the nation to continue to maximise its potential via the Nigerian DCM.
He reiterated the commitment of the OTC Exchange to continue to support the initiatives of the DMO toward the development of a highly liquid, deep and well-developed DCM in Nigeria.
Mr Kayode Akinkugbe, the Managing Director, FBNQuest Merchant Bank, said the company was happy to be associated with the bond.
“We are pleased to have advised the FGN on its N100 billion debut Sukuk issuance.
“And despite the fairly volatile market conditions, we leveraged FBNQuest Merchant Bank’s superb distribution platform to successfully distribute about 65 per cent of the offer,’’ Akinkugbe said.
He said the issuance was the first attempt by the Federal Government to raise funds through non-interest instrument in the capital market for infrastructure development.
This is also expected to deepen the Nigerian capital markets and diversify the government funding sources.
Ms Tumi Sekoni, the Associate Executive Director, Capital Markets, FMDQ, commended the issuer for achieving the milestone.
“This is another highly laudable step by the Sovereign, through the DMO toward supporting the growth and development of the nation’s DCM.’’
She explained that the issuance would pave the way and encourage non-sovereign issuers to explore the issuance of non-interest-bearing securities, thereby adding to the depth and breadth of the domestic capital markets.
According to her, the listing of the pioneer sovereign Sukuk on FMDQ will serve as a benchmark for the pricing of subsequent Sukuk issuances.