The Federal Government on Thursday offered for subscription N150billion seven-year Sukuk that will be due in 2027.
The Debt Management Office (DMO) disclosed on its website that the Sukuk, with a rental rate of 11.20 percent, would open on May 21, 2020, and close on June 2, and the settlement date for the bond will be June 9, 2020.
The funds from the issued Sukuk will be channelled to funding the construction/rehabilitation of key economic infrastructure projects across Nigeria such as roads, to diversity the sources of government funding, and to offer investors an opportunity to invest in government-issued securities, according to DMO.
“The proceeds will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country,” the subscription statement seen by BusinessDay said.
According to the DMO, the unit of sale is N1,000 per unit, subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter. The rental payment is payable half-yearly, with a redemption bullet repayment on the date of maturity.
Interested investors can subscribe for the Sukuk which is backed by the full faith and credit of the FGN through FBNQuest Merchant Bank and Lotus Financial Service Limited. The subscription form can also be downloaded on the DMO website or from any of the issuing house.
On the receiving banks, DMO listed: First Bank of Nigeria, Stanbic IBTC, Jaiz Bank, Taj Bank Sterling Bank Zenith Bank and Unity Bank.
It noted that the instrument type which is Ijarah (Lease) Sukuk, being issued by the FGN Roads Sukuk Company 1 Plc is on behalf of the Federal Government of Nigeria.
As for the status of the Sukuk, DMO said it qualifies as securities in which trustees can invest under the Trustees Investment Act. Qualifies as Government securities within the meaning of Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for tax exemption for Pension Funds, among other investors.
While it will be listed on the Nigeria Stock Exchange and FMDQ OTC Securities Exchange, DMO said the bond is certified by the Financial Regulatory Advisory Council of Experts (FRACE) of the Central Bank of Nigeria and is classified as Liquid Asset by the apex bank.
“I recommend for parents and those with low-risk appetite. It is the safest haven,” a Lagos-based investment analyst said.