Nigeria set to raise N100bn through Islamic bond

The Federal government of Nigeria has completed plans to sell its debut $328 million (N100 billion) sovereign Sukuk in the local debt’s market to help finance roads projects in the country.

This information was released by the Debt Management Office (DMO) in Abuja on Tuesday, June 13, 2017. The DMO further stated that the Islamic bond, which is the first for the country, is a 7-year tenor debt instrument and will go on sale from June 28, 2017, for three days via book building. It will be traded on the Nigerian Stock Exchange (NSE) and the FMDQ OTC platform. With this move by the government, the country is seeking to utilise its large Muslim population to garner capital to fund part of the deficit in the recently signed 2017 budget.
Nigeria is home to the largest Muslim population in the Sub-Saharan Africa, with also one of Africa’s fastest-growing corporate banking sector and consumer population.
The DMO noted that the issue is “part of the plan to fast-track the development of infrastructure and engage in … project-tied capital raising,” which would address the country’s challenges with road, railway and power infrastructures development.
Osun state in 2013 issued an N10 billion Sukuk, which was the only one ever issued in the country. Then, the bond was over-subscribed by 42 core investors which only one of them is Islamic based institution – Jaiz Bank Plc.
The FG has initiated hinted that it would be borrowing over $10 billion ( NN3.06 trillion) from the debt market to help finance huge budget deficit occasioned by the fall in global oil prices which have drastically reduced the government revenue and poor economic performance.
Earlier this week, the DMO also announced a roadshow to the United Kingdom, Switzerland and the United States of America to pitch a $300 million Diaspora bond to Nigerians living abroad. Nigerian government is also expected in no distance time to issue N20 billion “green bond”, alongside others fund-raising programmes of the current government.