Nigeria’s N250bn sukuk oversubscribed 346%

Investors again jostled for Nigeria’s N250 billion Sukuk bonds, pushing subscription levels to a record 346 percent, the Debt Management Office (DMO) said at the weekend.

This is the fourth straight time that Nigeria’s Sukuk will be oversubscribed since its debut in 2017, to among other things bring in revenues for road funding, deepen the local debt market as well as financial inclusion.

“The N250 billion Sovereign Sukuk whose offer opened on December 16, 2021, closed yesterday December 23, 2021, with an unprecedented subscription level of over N865 billion. This outcome represents a subscription level of 346%,” the DMO said in a mailed note.

The N250 billion issuance – the fourth in the series is a 12.80 percent, 10-year Ijara Sukuk due 2031, and will be used to finance up to 71 key economic road infrastructure, specifically identified by the Federal Ministry of Works and Housing, Federal Capital Territory Administration and the Ministry of Niger Delta Affairs.

Read also: Six numbers that shaped Nigeria’s 2021 debt profile

The Debt office did not immediately say how much was allotted; however, the outcome has successfully closed the N3.145 trillion domestic debt targets for fiscal 2021.

An analysis of the subscription data by the DMO indicated high levels of subscription from banks and fund managers (including pension funds), as well as non-interest financial institutions, ethical funds, cooperative societies, and retail investors.

“The increasing level of participation by a more diverse and larger number of investors is a confirmation that the DMO’s objectives of issuing Sovereign Sukuk to grow the domestic investor base and promote financial inclusion are being achieved.

“In addition, the high subscription level is a proof of investors’ acknowledgment of the impact the $362.57 Billion Sovereign Sukuk issued between 2017 and 2020 has had on the development of road infrastructure in Nigeria,” the DMO stated.

The DMO further reaffirmed that the proceeds of the N250 Billion Sovereign Sukuk would be used to finance the rehabilitation and reconstruction of road projects across the six geopolitical zones and the Federal Capital Territory.

“There is the demand coming from different directions apart from the history of even the three Sukuk we have issued, and that is why we are optimistic,” Patience Oniha, director-general, DMO, had told BusinessDay just on Tuesday ahead of the close of the deal.

“The New Domestic Borrowing for budget deficits for 2021 (including the Supplementary Budget) is N3.145 trillion out of which we have raised N2.895 trillion leaving an outstanding of N250 billion. This is what we want to issue as Sukuk.”