There was a scramble for third sovereign Sukuk auctioned by the Debt Management Office (DMO) on behalf of the federal government of Nigeria.
At the exercise, the debt office offered N150 billion to investors, but it was observed that the sale attracted a very high level of subscription from market participants.
According to the analysis of the bids, the DMO received total subscriptions of N669.1 billion, representing a subscription level of 446 percent.
In a statement, the DMO said it allotted N162.6 billion to investors in the third sovereign Sukuk, with proceeds to be used to finance 44 critical road projects across the six geopolitical zones of the country.
The impressive demand for the Sukuk came from a wide range of investors which included ethical funds, insurance companies, fund managers and retail investors amongst others.
According to the debt office, this participation by a wide range of investors is in line with its objectives of diversifying the investor base for government securities and promoting financial inclusion.
The issuance of the third sovereign Sukuk, which followed the debut issuance of N100 billion in September 2017 and a second issuance of another N100 billion in December 2018, is based on the DMO’s commitment to using borrowed funds to finance infrastructure.
The Sukuk issuances are project-tied and are used to finance specific projects which are disclosed to investors.
The benefits from the earlier Sukuk issuances, which were also used to finance roads, include improved safety on the roads, faster travel times, access to markets for farm produce and opening up parts of the country for development.
Other important benefits of using Sukuk to finance road projects are job creation and increased level of activity for service providers, many of whom are small businesses.
The DMO said it expects to continue to raise funds through Sukuk to support improvement in infrastructure and development of the domestic capital market.
Adedapo Adesanya 
Modupe Gbadeyanka