Following the successful appointment of the first Federal Government of Nigeria Sukuk Bond in 2017, FBNQuest Merchant Bank Limited has been appointed as the co-financial adviser to the Debt Management Office (DMO) on the issuance of the second N100 billion Sukuk offer.

This development was disclosed in a statement by the firm. According to the statement, the Sukuk II offer was aimed at consolidating on the gains of the Sukuk I by injecting an additional N100 billion, which would be directed at funding more infrastructure development projects across the country.

The statement also has it that the Sukuk further sought to diversify the Federal Government’s source of funding, deepening the market for domestic securities and improve financial inclusion, particularly for ethical investors.

The Sukuk II offer will open to the public from December 6 to 17, 2018.

The statement read in part:

“The first sovereign Sukuk bond was debuted by the FGN in September 2017, with FBNQuest Merchant Bank selling over 65 per cent of the total subscriptions to both institutional and retail investors.

“A major benefit of the Sukuk II is its low-risk investment profile as the FGN is fully responsible for the payment of investors’ rental income bi-annually and the repayment of the principal at maturity.”

The statement added that the rental income would be tax-free to encourage investment among the financially excluded as well as a new class of ethically-minded investors.

It added that the Sukuk II was supported by the full faith and credit of the Federal Government and offered subscribers an opportunity to contribute to the development of road infrastructure in Nigeria.

Nairametrics had reported that the DMO on behalf of the Federal Government, opened an offer for subscription of a N100 billion Sukuk bond.

What you should know about Sukuk bonds

Sukuk is derived from the word Sakk, which can be translated to mean legal instrument, deed, and cheque. Sakk can also mean to strike a deal on a paper document.

The origin of Sukuk dates back to 7th century AD, where the first Sukuk transaction took place in Damascus, Syria in the Great Mosque of Damascus (Umayyad Mosque).

Due to the fact that Islam prohibits usury – collecting interest from your loans – interest based bonds are banned in Muslim nations.

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