Second Sukuk bond listed on NSE, targets more roads

The second Federal Government N100 billion Ijarah Sukuk has been listed on the Nigerian Stock Exchange (NSE) by the Debt Management Office (DMO).

The Director-General, DMO, Patience Oniha, who disclosed this while speaking at the investor presentation in Lagos, said the government was happy and proud of the success stories of the first Sukuk and decided to issue a second one.

According to her, a lot of encouragement was received from construction companies because they got their money as and when due, which made the projects go as planned.

Oniha further noted that the proceeds of the first Sukuk issuance, which was invested in road construction, brought reprive to road users, improved travel times between major commercial cities, linked borrowing and government expenditure to specific critical projects, helped increase the flow of cargo and passenger traffic across major cities, improved infrastructure delivery across the country, among others.

Retail investors’ participation in the first Sukuk, according to Oniha, was about five per cent, hoping that she more retail investors would partake in the second one

According to her, stockbrokers will be involved in the process to get a lot of retail investors to participate.

She said: “This second Ijarah Sukuk is due in 2025 and has a rental rate of 15.743 per cent. We listed the Sukuk on the NSE and the FMDQ on Thursday, which was the date it opened, and it will close on December 17, 2018.

“The allotment date is December 21, 2018. The proceeds from the Sukuk will be invested in road infrastructure development, just like the last one. Though the proceeds will not see the roads to completion, it will go a long way in improving the state of our roads.

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“The first Sukuk increased retail participation in the capital market as over N15.6bn of it has been traded since listing.” she said.

Continuing, Oniha said: “We are aware of the fear people have about the 2019 elections, but we want to assure you that no matter the government in power, debts will always be serviced and people will receive their money at maturity.

“The main objective of the second Sukuk is to sustain the rehabilitation and construction works on the 25 key economic roads in the six geopolitical zones with three roads now added for more reach.”

On the nation’s high debt profile, Oniha, explained that the DMO and the Federal Government were working to reduce the debt profile of the country as the ratio of debt service to revenue was higher than what it used to be.

She noted that if revenues are higher in the country, borrowing will reduce.

According to her, the tax to Gross Domestic Product ratio was low at six per cent, which she said were signs that citizens were not paying enough taxes.

She said: “This has to change. We cannot continue that way. Taxes will be introduced on select goods such as heavily-consumed goods.

“The Federal Inland Revenue Service is doing a lot to generate more taxes for the government and we will give them maximum support.”

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