FG Offers N150bn 7-Year Ijarah Sukuk at 11.2%

Sukuk Islamic bonds

By Adedapo Adesanya

The Federal Government has begun the sale of its third tranche seven-year N150 billion Sovereign Sukuk, the Debt Management Office (DMO) announced on Thursday.

The offer circular, which was obtained from its website, said the seven year Islamic Sukuk, referred to as Ijarah, is at a rental rate of 11.2 percent and would be due in June 2027.

The bond, which is aimed at funding key road infrastructure across the six geo-political zones, is payable semi-annually.

The subscription for the bond, which is guaranteed by the federal government, will close on June 2, 2020.

The circular said subscribers can purchase N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter, with First Bank and Islamic wealth manager, Lotus Capital, managing the sale.

The DMO said the papers qualify as securities in which trustees could invest under the Trustee Investment Act and as government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for Tax Exemption for Pension Funds, amongst other investors.

After issuing to investors, the debt office will take the bonds to the Nigerian Stock Exchange (NSE) and on FMDQ Over-The-Counter (OTC) platforms for listing.

The bond, which is classified as liquid asset by the Central Bank of Nigeria (CBN), is also certified by the Financial Regulatory Advisory Council of Experts (FRACE) of the CBN, the circular said.

The federal government had in 2017 raised a N100 billion seven-year debut Sukuk bond for the financing of 25 road projects across the six geopolitical zones of the country.

It also raised another N100 billion in 2018 for a seven-year period for the same purpose, making it N200 billion raised so far for the Sukuk bonds.

With this new addition to the Sukuk bond class, it puts the total bond at N350 billion.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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