FG Releases Proceeds from Sale of Second N100b Sukuk

By Modupe Gbadeyanka

Proceeds from the second 7-year N100 billion Sovereign Sukuk issued on December 28, 2018 at 15.743 percent and due in 2025 have been released to the Federal Ministry of Power, Works and Housing.

The cheque was presented to the ministry by the Minister of Finance, Mrs Zainab Ahmed at a ceremony.

The Sukuk is part of the New Domestic Borrowing in the 2018 Budget to finance about 28 road projects spread across the six geo-political zones of the country, with each having a total allocation of N16.67 billion.

Director-General of the Debt Management Office (DMO), Ms Patience Oniha, said, “Sukuk has become a veritable tool for financing infrastructure which has several multiplier effects including job creation and boosting economic activities. 

“In addition to being a viable tool for financing infrastructure, the Sovereign Sukuk promotes financial inclusion and the development of the domestic financial markets.”

Business Post reports that during issuance of the second tranche of the Sukuk, the offer attracted significant interest from a wide range of retail and institutional investors with a total subscription of N132.20 billion, representing a subscription rate of 132.2 percent.

It was gathered that retail investors accounted for 17.33 percent of the total allotment compared to 4 percent recorded in the debut issuance, indicating that the stated objectives of financial inclusion and deepening of the investor base for FGN securities, in addition to infrastructure funding are being achieved.

The high level of subscription and participation by a diverse range of investors demonstrate the high level of investor confidence in the financing product, particularly, because the road projects funded with the proceeds of the first Sukuk that was issued in 2017.

The 25 road projects, which benefited from the debut Sukuk have resulted in improved transportation across the six geo-political zones.

The Sukuk offer opened following investor meetings in Lagos and Abuja by a delegation led by Ms Oniha, and included representatives of the Federal Ministry of Power, Works and Housing and the transaction parties for the Sukuk issuance.

The transaction parties were FBNQuest Merchant Bank Limited, Lotus Financial Services Limited, Banwo & Ighodalo and Sefton Fross, FBNQuest Trustees Limited and STL Trustees Limited.