The Debt Management Office, DMO, has disclosed that the Federal Government will channel the N130 billion raised from Sukuk issuance towards fixing federal roads across the country.
The DMO Director General, Patience Oniha, made the disclosure in a report released on Monday in Abuja.
According to her, the net proceeds of the 2022 Sovereign Sukuk would be used solely for the construction and rehabilitation of key road projects through the Federal Ministry of Works and Housing and the Federal Capital Territory Administration, FCTA.
Ms Oniha said the government recognised the need to issue more Sukuk bonds given the increasing success and strong investor’s appetite for the alternative non-interest bonds.
According to her, the Sukuk initiative by DMO has been increasingly successful given the strong level of awareness that has been created.
She attributed the success of the Sukuk issuances to the increased confidence from market participants given that the Sukuk bonds are tied to specific projects that can be tracked.
“Looking ahead, we recognise the need to upscale issuances to include other standalone projects beyond road infrastructure, but more importantly, we are looking to support projects that are revenue generating to service the Sukuk” Ms Oniha said.
She added that there must be a focus on growing and diversifying the investor base for the Sukuk as well as other investment products.
Since introduction in 2017, the government had used proceeds from Sukuk issuances to fund the construction of not less than 71 roads and six bridges, measuring 1,881 kilometres all over the country.
The latest sovereign Sukuk was issued at a rental rate of 15.64 per cent. The N130 billion Sukuk brings the total sovereign Sukuk issuances by the federal government to N742.557 billion.
The Sukuk will now be listed on the Nigerian Exchange, NGX, and FMDQ Securities Exchange.
According to the DMO, the N100 billion Sukuk is a 10-year facility; a non-interest and an alternative instrument designed in a form of a lease with rental rate.
It was issued through a special purpose vehicle – FGN Roads Sukuk Company 1 Plc, which will apply the net proceeds of the Sukuk to development of identified roads.
