In a bid to address the infrastructure challenge bedevilling the country, the Debt Management Office (DMO) on Tuesday disclosed that the Federal Government would float over N100 billion third Sukuk Bond before the end of 2019. Ms Patience Oniha, DMO’s Director-General, stated this at inaugural edition of the Islamic Finance Network (IFN) Nigeria Forum organised by the Nigerian Stock Exchange (NSE) in partnership with REDMoney Group in Lagos. Oniha said the government was perfecting arrangements to float over N100 billion Sukuk Bond for the financing of some infrastructure projects listed in the 2019 budget.
Sukuk are bonds structured to generate returns to ethical investors without infringing on the Islamic law, which forbids interest payments. “It represents an ownership interest in the asset to be financed rather than a debt obligation. It will be this year 2019 by God’s grace because the budget has been approved. The projects would be those included in the budget and the borrowing will also be what has been approved in the budget, as part of new domestic borrowing. So, it will be this year,” Oniha said. She said the government was eager to use borrowing to finance infrastructure, which was what the Sukuk represented. On the specific amount to be raised, Oniha said the DMO had to issue an amount that the market could absorb.
“Once the advisers can give us an indication of an appetite about them, I have asked them if they can raise N200 billion for instance. It depends on what is on the table. We have to issue an amount that the market can absorb, that we are sure we can raise. Then the remaining we can do our regular FGN bond in the domestic market. So in summary, we are happy to do more than a N100 billion once we are sure there is demand at a price that compares with that of a similar FGN bond,” she said. On the listing of the second N100 billion Sukuk Ijarah Bond on the NSE and FMDQ OTC Securities platforms, Oniha said it would be listed in July. She said the bond floated in December was yet to be listed on the NSE and FMDQ OTC Securities platforms because of allotment and ground breaking issues.
The director-general said the DMO needed to ensure allotment to all successful parties as well as commencement of the infrastructure projects before applying for the listing of the bond.
