Investments: DMO issues N100bn ‘Sukuk’ bonds at N1,000 per unit for investors

*Nigeria’s Debt Management Office explains the investments qualify as government securities within the meaning of Company Income Tax Act, Personal Income Tax Act, and for tax exemption for pension funds administrators among other investors

Isola Moses | ConsumerConnect

The Debt Management Office (DMO) has offered N100billion “Ijarah Sukuk’’ bonds for subscription at N1,000 per unit behalf of the Federal Government of Nigeria (FGN).

The DMO Monday, November 21, 2022, stated this in Abuja, FCT, explaining that the offer is of 10-year tenor due for maturity December 2032.

The bonds are issued by FGN Roads Sukuk Company1 Plc, through Greenwich Merchant Bank Limited, Stanbic IBTC Capital Limited and Vetiva Capital Management Limited.

ConsumerConnect reports the Securities and Exchange Commission (SEC) has described ‘Ijara Sukuk’ as securities representing ownership of assets that are linked to a lease contract. Lease rentals are the source of returns to investors in this contract. Ijara Sukuk can be traded in the secondary Sukuk market at a price determined by the demand and supply of the product.

According to the Office, the proceeds of the invesments would be invested solely in the construction and rehabilitation of certain strategic roads across the country.

It also stated: “Date of offer is Nov. 21; closing date is Nov. 29 while settlement date is December 2, 2032.

“It is offered at N1,000 per unit subject to a minimum subscription 10,000 units and in multiples of 1,000 thereafter.

“Rental payment is made half-yearly while bullet payment (principal sum) will be made on the date of maturity.”

The DMO further said: “Proceeds will be used solely for the construction and rehabilitation of key road projects across the six geopolitical zones of the country.”

The Ijarah Sukuk bond is backed by the full faith and credit of the Federal Government, noted the Office.

The DMO stated: “It qualifies as securities in which trustees can invest under the Trustee Investment Act.

“It also qualifies as government securities within the meaning of Company Income Tax Act and Personal Income Tax Act and for tax exemption for pension funds administrators among other investors.

“It will be listed on the Nigerian Exchange Ltd. and the FMDQ Securities Exchange Ltd.

“It is classified as liquid asset by the CBN and certified by the Financial Regulations Advisory Council of Experts also of the CBN.”

 

It is recalled the Ijarah Sukuk bond like the FGN bonds and FGN savings bonds, constitutes part of the domestic component of government borrowings.

Introduced 2017, the Ijarah Sukuk bond has provided N612,557 billion for the Federal Government, which has helped in funding 71 roads and six bridges measuring 1,881 kilometres across the country, agency report stated.

Sukuk bond was last issued December last year.

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