DMO Commences Pre-offer Sensitisation for N100bn Sukuk

The Debt Management Office (DMO) has commenced activities preparatory to the issuance of the much anticipated N100billion Sukuk, which is non-interest bearing bond.

According to a statement from DMO, the agency will commence a national road show that will be led by its Director-General, Ms. Patience Oniha on Thursday (today).

DMO said the road show would be taken across major cities in Nigeria such as Kano, Kaduna, Lagos and Port Harcourt.

The team would be accompanied by its Financial Advisers, Lotus Capital Financial Services Limited and FBN Merchant Bank Plc.

“The road show is to create awareness about the Sovereign Sukuk and sensitise target investors about the features and benefits of the financial instrument,” the agency said.

The DMO had announced its intention to issue a Sovereign Sukuk in the domestic market as part of measures to fund the 2017 budget deficit.

Apart from serving as alternative source of funding for the government, the Sukuk will also serve to diversify the investor base for Federal Government of Nigeria (FGN securities, promote financial inclusion and deepen the domestic capital market.

Proceeds from the Sukuk issuance, according to the DMO, will be used to finance specific road projects.

Sukuk are asset-based securities, not debt instruments, and represents ownership in a tangible asset, service, project, business or joint venture.

“This is why Sukuk fits into the DMO debt strategy of borrowing to finance capital projects contained in the budget. This ensures that Government borrowings are used to finance development projects which have multiple economic and social benefits for citizens,” DMO said.

The debut Sovereign Sukuk is for N00 billion with a tenor of Seven years, and has been certified as ethically compliant by the Financial Regulation Advisory Council of Experts of the Central Bank of Nigeria.

Benefits to be derived from investment in the Sukuk, according the DMO, include “safety, regular income which are tax free and liquidity as they will be listed and traded on The Nigerian Stock Exchange and the FMDQ OTC Securities Exchange Plc.”

The product is also useful as collateral to access loans from banks.

DMO disclosed that the offer for subscription will open in the week after the road show and will be advertised in major newspapers.

It is expected that the Sukuk will attract huge subscriptions from a wide range of institutional and retail investors including fund managers, associations and groups as the minimum amount that an investor can purchase has been fixed at N10,000.