Despite the market and economic uncertainty due to the coronavirus pandemic, investors expressed a lot of confidence in Nigeria’s debt market.
The Debt Management Office (DMO) has announced an oversubscription of the third sovereign Sukuk for which it offered N150 billion to investors. The offer attracted a very high level of subscription from investors, with total subscriptions of N669.124 billion. This represents a subscription level of 446%.
The DMO said, “This impressive demand for the Sukuk came from a wide range of investors which included Ethical Funds, Insurance Companies, Fund Managers and Retail Investors amongst others. This participation by a wide range of investors is in line with the DMO’s objectives of diversifying the investor base for Government Securities and promoting financial inclusion.
“The issuance of the third Sovereign Sukuk, which followed the debut issuance of N100 billion in September 2017 and a second issuance of another N100 billion in December 2018, is based on the DMO’s commitment to using borrowed funds to finance infrastructure. The Sukuk issuances are project tied and are used to finance specific projects which are disclosed to investors.”
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It allotted N162.557 billion to investors in the third Sovereign Sukuk. The proceeds of the issuance will be used to finance 44 critical road projects across the 6 geopolitical zones of Nigeria.
The earlier Sukuk issuances were also used to finance road projects which improved safety on the roads, ensured faster travel times, access to markets for farm produce, and it opened up parts of the country for development.
Other important benefits of using Sukuk to finance road projects are job creation and increased level of activity for service providers, many of whom are small businesses.
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The DMO expects to continue to raise funds through Sukuk to support improvement in infrastructure and development of the domestic capital market.