Ms Patience Oniha, Director-General, the Debt Management Office (DMO), on Thursday expressed optimism that the second tranche of N100 billion sukuk bond would be floated before the end of 2018.
Sukuk or Islamic Bond is a financial instrument structured to generate returns to ethical investors without infringing on the Islamic law, which forbids interest payments.
Oniha told news reporters in a telephone interview that the DMO had made significant progress to ensure successful issuance of the bond before year end.
“June was when the budget was approved and Sukuk is a project that was also approved in the budget.
“We will float it; we have made significant progress; we will issue it this year,’’she said.
The Director-General said the second tranche would be specifically for infrastructure development just like the first one issued in September 2017.
Oniha said that the DMO was working with the Ministry of Power, Works and Housing on the projects earmarked for the second tranche of the N100 billion Sukuk bond.
She said that the successful outcome of the first tranche made the Federal Government do more to strengthen infrastructure development.
She also expressed optimism that the second tranche would be oversubscribed, based on the feelers from investors and the public:
“We still have auctions regularly, we issue FGN Bonds and they have been oversubscribed.
“So, whether liquidity is tight or not, we have got good demands.
“Don’t forget we are selling good products when we do Treasury Bills and FGN Bonds.
“But in terms of sukuk, I think from the feelers we have got from investors and the public, it is a product the people want to associate with.’’
She noted that people would be more enthusiastic about the Sukuk because it’s for infrastructure.
The Federal Government in September 2017 issued a Seven-Year N100 billion maiden Sukuk (bond).
The Sukuk was offered at N1,000/unit (minimum of N10,000 or 10 units) as a regular bond but represents an ownership interest in the asset to be financed rather than a debt obligation.
Some of the roads funded by the bond include the Ibadan-Ilorin Road, Kolo-Otuoke-Bayelsa-Palm Road, Enugu-Port/Harcourt Road, Kaduna Eastern By-Pass, Kano-Maiduguri Road and Loko-Oweto Bridge over River Benue, among others.
