- FG Opens N100bn Sukuk Subscription, Targets Road Projects
The Federal Government on Thursday issued N100bn seven-year Sukuk that will be due in 2025.
The Debt Management Office disclosed on its website that the Sukuk, with a rental rate of 15.743 per cent, would open on December 6, 2018 and close on December 17.
The settlement date for the bond is December 18, 2018, according to the DMO
“The proceeds will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country,” it added.
According to the debt office, some of the road projects the fund would be used for are the reconstruction of Bida-Lambatta road in Niger State; the rehabilitation of Gwoza-Damboa-Goniri-Ngamdu road in Yobe/Borno states; and the construction of Ikom Bridge in Cross River State.
It noted that the instrument type is Ijarah (Lease) Sukuk, and the issuer is FGN Roads Sukuk Company 1 Plc on behalf of the Federal Government of Nigeria.
According to the DMO, the unit of sale is N1,000 per unit, subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter.
The rental payment is payable half yearly, with a redemption bullet repayment on the date of maturity.
The DMO stated that the Sukuk was backed by the full faith and credit of the Federal Government of Nigeria.
According to it, the Sukuk is an investment that represents the ownership interest of the holder in an asset or pool of assets.
The certificate entitles the holder to receive income from the use of the assets.
It noted that the Federal Government issued Sukuk to fund the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, to diversity the sources of government funding, and to offer investors an opportunity to invest in government-issued securities.
According to the DMO, the Sukuk is useful to achieve a higher level of financial inclusion and to serve as a reference for pricing Sukuk issued by other bodies, especially private sector issuers.