Sukuk Bonds Issuance: Nigeria raises N669bn from capital market in 2 years

Sukuk Bonds Issuance: Nigeria raises N669bn from capital market in 2 years

The Federal Government said it raised the sum of N669 billion from the Nigerian capital market through the issuance of Sukuk Bonds.

The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, disclosed this at the Chartered Institute of Stockbrokers (CIS) 2021 national workshop on Thursday.

While speaking on the theme, “Leveraging the Financial Markets to Achieve Double- Digit Economic Growth for Nigeria,’ Ahmed stated that the Federal Government through the Debt Management Office (DMO) raised N669 billion from the capital market between 2018 and 2020, through three different issuances of Sukuk Bonds.

In her words: “This financing was used to construct and rehabilitate more than 44 roads across the six geo-political zones of our country.

“Also worthy of note, is the offer for subscription of the Federal Government of Nigeria Savings Bonds of the DMO which has been executed successfully, bond issue after bond issue.

“What is pleasing to us, is that every time the DMO goes for bond issue, the bond are several times oversubscribed.

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“This shows the interest of the investing public in Nigeria putting their monies to support the Federal Government of Nigeria in bridging our infrastructure deficit gaps,’’ Ahmed said.

She disclosed that the Federal Government would issue another Eurobond in September to finance capital deficit.

“The Federal Government of Nigeria also has access to the international markets with a number of Eurobonds issuance to finance capital deficit and the next round of Eurobond issuance would be sometime in September this year.

“We will be going out to international capital market and already we have very positive indications to that regard,’’ she added.

Ahmed noted that the Federal Government recently approved the establishment of an Infraco Company, an infrastructure company, envisaged to be world class infrastructure development vehicle for Nigeria.

“This company will serve as a platform for seamless public private partnership in infrastructure financing in the country, interfacing with institutions such as Central Bank of Nigeria, the Nigerian Sovereign Investment Authority, the pension funds and other financial institutions,’’ she said.

Ahmed said the theme of the workshop was apt and pivotal to economic agenda of this administration.

“It is a known fact that no nation of the world attains optimal infrastructure development without the efficient use of its capital market.

“I will like to appreciate the important role of the Nigerian capital market, the role that it has played over the years and it will continue to play in the infrastructure financing and capital formation of our country.

“The NCM has over the years provided access to significant long-term development projects to the government of Nigeria and also to the other tiers of government and also the private sector.

“In an attempt to achieve economic growth, the government had earlier developed the ERGP 2017 to 2020, it was a medium term plan designed to muster growth and build globally competitive economy.

“Through the diversification of the economy to increase investment in infrastructure, digitisation of the economy, improvement in the ease of doing business, and development of human capital.

“The year 2020 was like no other year, particularly due to the impact of the COVID-19 pandemic, our three-year consecutive growth in the GDP was stalled at the second quarter of 2020 by the harsh economic impact of the global pandemic.

“Our 2020 budget of sustaining growth and job creation had to be abandoned in response to the fiscal pressures arising from the pandemic.

What to know about Sukuk Bond

Sukuk bonds are sharia-compliant financial instruments representing undivided ownership interests in defined assets.

Sukuk bonds are legally regulated in Nigeria. The Securities Exchange Commission Rules and Regulations 2013 (SEC Rules) provides the legal framework for the issuance of sukuk bonds in Nigeria. In addition, the Nigerian Stock Exchange (NSE) has also prescribed rules governing the listing of sukuk and debt securities on its exchange.

The SEC Rules provides that Public companies (including SPVs), State Governments, Local Governments, and Government agencies as well as multilateral agencies are eligible to issue, offer or make an invitation of sukuk.

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