The proportion of retail investors that subscribed for the second tranche of the Federal Government’s N100 billion sukuk bond has risen from 4 percent to 17 percent, the country’s debt office said Thursday.
In an update of the 7-year bond issued December 28, 2018, Nigeria’s Debt Management Office (DMO) disclosed that retail investors accounted for 17.33 percent of the total allotment compared to 4 percent recorded in the debut issuance.
It said the growth in retail investors allotment indicates that the stated objectives of financial inclusion and deepening of the investor base for federal government securities, in addition to infrastructure funding are being achieved.
The offer, according to the DMO attracted significant interest from a wide range of retail and institutional investors with a total subscription of N132.20 billion, which represents a subscription rate of 132.2 percent.
“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 were evident for all to see,” the DMO said.
It added that some “25 road projects, which benefited from the debut sukuk have resulted in improved transportation across the six geo-political zones.”
The debt office further disclosed that upon successful completion of the funds raised, Zainab Ahmed, the country’s minister of finance presented the symbolic N100 billion sukuk cheque to the federal ministry of power, works and housing on Thursday.
Commenting on the successful issuance of the second N100 billion Sovereign Sukuk, Patience Oniha, the director general, DMO said that “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
The proceeds of this second Sovereign N100 billion Sukuk will be deployed to financing infrastructure, in keeping with the Government’s commitment to bridging the infrastructural gap.
The proceeds will be for the construction and rehabilitation of 28 key economic road projects in the 2018 Budget.
The road projects are located in the 6 geo-political zones of the country with each zone having a total allocation of N16.67 billion, Oniha said.
The second 7-year N100 billion Sovereign Sukuk issued by the Federal Government of Nigeria on December 28, 2018, is a (15.743% N100BN Al Ijarah Sukuk due 2025).
It is part of the new domestic borrowing in the 2018 budget to finance road projects.
The sukuk offer opened following investor meetings in Lagos and Abuja by a delegation led by 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.