FG Seeks Advisers for Debut Islamic Bond

• FG Seeks Advisers for Debut Islamic Bond

The Federal Government is looking for financial and legal advisers and trustee firms to organise its first Islamic bond in the domestic market, the Debt Management Office has said.

According to the DMO, the government is working on a debut sovereign sukuk but has yet to determine the size of a potential deal.

The country is in a recession and needs to raise funds to plug a budget deficit. As a result, the Federal Government has set up a committee to advise on the amount to be raised from the Islamic bond sale, the timing and jurisdiction of the issue.

Issuance of a sovereign sukuk is part of a plan by the DMO to develop alternative sources of funding and to establish a benchmark curve.

In a public notice on Monday, the DMO said it required the services of banks and an issuing house to serve as financial adviser, a legal firm to serve as a legal adviser and a trustee firm.

According to the notice, bids for the roles are to be submitted by January 9, 2017.

The advisers are expected to work with the debt office towards the sukuk issue at a date that is yet to be announced, according to a Reuters report.

The Central Bank of Nigeria had in October issued guidelines limiting commercial banks’ investment in Islamic bonds issued by state governments to 10 per cent of the total amount on offer and fixed a maximum tenor of 10 years for the bonds.

Nigeria has the largest Islamic population in sub-Saharan Africa.

Around half of the 180 million people are Muslims.