Sovereign Sukuk bond floated by Nigeria has been over-subscribed hitting N865 billion from the target of N250 billion as at December 16, 2021.
The unprecedented subscription is 346 per cent higher than expected, the Debt Management Office (DMO), has reported.
An analysis of the subscription data by the DMO revealed high levels of subscription from banks and fund managers (including pension funds), as well as non-interest financial institutions, ethical funds, cooperative societies and retail investors.
According to the debt management agency, the increasing level of participation by a more diverse and larger number of investors is a confirmation that its objectives of issuing Sovereign Sukuk to grow the domestic investor base and promote financial inclusion is being achieved.
It noted: “In addition, the high subscription level is proof of investors’ acknowledgement of the impact the USD362.57 billion Sukuk issued between 2017 and 2020 has had on the development of road infrastructure in Nigeria.
“The DMO has reaffirmed that the proceeds of the N250 billion Sovereign Sukuk will be used to finance the rehabilitation and reconstruction of road projects across the six (6) geopolitical zones and the Federal Capital Territory.”
The N250 billion issuance – the fourth in the series is a 12.80 per cent, 10-year Ijara sukuk due 2031, and will be used to finance up to 71 key economic road infrastructure, identified by the Federal Ministry of Works and Housing, Federal Capital Territory Administration (FCTA) and the Ministry of Niger Delta Affairs (MNDA)
Speaking during an investor forum and press conference in Abuja on Monday, the Director General of DMO, Ms. Patience Oniha, said the federal government opted for sovereign Sukuk for a number of reasons, including to enable it fund the construction and rehabilitation of key economic roads across the country as well as offer ethical investors an opportunity to invest in government-issued securities.
She stressed that the government also hopes to achieve a higher level of financial inclusion, raise project-tied funds, and deepen the domestic financial markets. The N250 billion Sukuk was floated as part of the New Domestic Borrowing for the 2021 Budget deficit of N3.145 trillion.
Of that sum, the federal government had earlier raised N2.895 trillion through the DMO, leaving an outstanding of N250 billion which the Sukuk is designed to fill.