FG Woos Investors With N100bn 10-Year Sukuk at 15.64%

By Aduragbemi Omiyale

The Nigerian government is asking retail, high-net-worth individuals, and institutional investors to buy the N100 billion 10-year Sukuk it is offering for sale through the Debt Management Office (DMO).

Subscription for the Sukuk Al Ijarah (lease) commenced on Monday, November 21, 2022, and will close on Tuesday, November 29, 2022, details of the exercise obtained by Business Post showed.

According to a circular issued by the debt office, the FGNSUKUK will be backed by the full faith and credit of the Federal Government of Nigeria, indicating that the element of default is very low.

The DMO will sell the Islamic bond at N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter, with proceeds from the sales used to finance some critical road projects across the six geopolitical zones of the country.

The bond, which would be listed on the Nigerian Exchange (NGX) Limited and the FMDQ Securities Exchange Limited, has a rental rate of 15.64 per cent per annum to be paid to investors semi-annually in arrears in the form of a rental payment from the FGN.

According to the subscription form, payment narrations must include the individual’s first name and BVN number and the banks for the purchase are Jaiz Bank, Lotus Bank, Stanbic IBTC Bank, Sterling Bank, and TAJ Bank.

However, intending subscribers can purchase the debt instrument through authorised brokerage companies, but the subscription form must be filled and submitted on or before noon of the closing date to enable timely submission to the DMO.

Lately, investors have found solace in the fixed-income market because of the volatility in the equity market due to the harsh macroeconomic environment triggered by inflationary pressures.

The National Bureau of Statistics (NBS) recently said inflation rose by 21.09 per cent in October 2022 compared with 20.77 per cent a month earlier.

With the monetary policy rate (MPR) now at 16.50 per cent and inflation at 21.09 per cent, investments in stocks cannot guarantee returns close to or above inflation; the fixed-income market is the space investors want to dump their funds without fears of recording losses.