Nigeria’s first Sukuk bond of N100bn to mature in September
Nigeria’s first Sukuk bond of N100 billion, which was issued on September 26, 2017, is set to mature on September 26, 2024.
This is according to the 2023 Annual Activity Report of the Financial Markets Department of the Central Bank of Nigeria (CBN).
However, Nigeria has been paying rentals at a rate of 16.47 percent on this bond every March 26 and September 26 as a form of debt service before its maturity date.
According to the Securities and Exchange Commission (SEC) in Nigeria, Sukuk is an Arabic word, which refers to investment certificates or notes that evidence proportionate interest in ownership of tangible assets, usufructs and services or investment in the assets of particular projects or special investment activity that adhere to the principles of Shariah.
Sukuk is a hybrid instrument in that it combines both equity (shares in ownership of underlying asset/project) and debt features (fixed periodic payments/coupon payments).
Following the auction of the bond in 2017, the Debt Management Office (DMO) announced that its offer for the N100 billion 7-year debut Sukuk Offer was oversubscribed.
Investors across a broad spectrum comprising pension funds, banks, fund managers, and institutional and Retail Investors subscribed to the offer.
The offer attracted a total subscription of N105.878 billion. However, only N100 billion, the exact amount offered, was allotted.
Over 1,000 retail investors from across the nation accounted for over 4 percent of the total subscription, according to the agency in charge of the country’s debt.
The DMO indicated that funds would be utilised for the construction and rehabilitation of 25 roads across the six geopolitical zones.
A part of the funds raised was used for the Abuja-Abaji-Lokoja Road, the Obajana-Okene Road, the Suleja-Minna Road and the Kaduna Eastern Bypass Road.
With the issuance of this Sukuk bond in 2017, a new instrument, the Sovereign Sukuk, was introduced to Nigeria’s capital market. Since 2017, five more Sukuk bonds, bringing the total number of Sukuk bonds to six.
The second Sukuk issued was an N100 billion 7-year Ijarah Sukuk with a rental rate of 15.43 percent per annum issued in December 2018. It was oversubscribed by N32 billion but N100 billion of the Sukuk was allotted by the DMO.
The third Sukuk issued was a N150 billion 7-year Ijarah Sukuk with a rental rate of 11.2 percent per annum issued in June 2020. DMO allotted N162.557 billion after recording a subscription of N669.124 billion.
The fourth Sukuk issued was a N250 billion 10-year Ijarah Sukuk with a rental rate of 12.8 percent per annum issued in December 2021. DMO recorded a subscription of N865 billion for this Sukuk, however, N250 billion was allotted.
The fifth Sukuk issued was an N100 billion 10-year Ijarah Sukuk with a rental rate of 15.64 percent per annum issued in December 2022.
The most recent issuance saw the offering of N150 billion for 10-year Ijarah Sukuk in October 2023. However, the DMO recorded a subscription of N652.827 billion, representing an oversubscription of N502.827 billion.
The DMO then allotted N350 billion worth of the Sukuk at a rental rate of 15.75% per annum and a tenor of 10 years.
Nigeria through the DMO has raised about N1.092 trillion through six issuances of Sovereign Sukuk.
Funds raised by the DMO through the different Sukuks have been used to facilitate the construction and rehabilitation of over 4000 kilometres of roads and bridges in Nigeria.
