DMO lists N163 billion Sukuk bond on Nigerian Exchange Limited

The Debt Management Office (DMO) Thursday dual-listed the N162.557 billion FGN Ijarah Sukuk with a seven-year tenor at a rental rate of 11.20 per cent on the Nigerian Exchange Limited and the FMDQ Securities Exchange.

The third Sovereign Sukuk was issued last June to fund countrywide rehabilitation and development of roads of key economic importance. It is due in 2027.

At the completion of the debt issuance in 2020, the Sukuk was overwhelmingly subscribed to the tune of N669.124 billion or 446 per cent, and the proceeds were intended to be ploughed into 44 economic road projects in the six geopolitical zones making up Africa’s biggest economy.

“With the listing, investors who are already holding the SUKUK can trade them while new investors have an opportunity to buy the SUKUK in the secondary market,” said Abuja-based debt office in a press release.

Africa’s largest economy has been heaping up debts to bridge a yawning gap in its road and rail infrastructures as well as in other critical amenities.

Its network of ramshackle roads, which are death-traps at the best of times, and poor power supply have stood in the way of growth and held back its potential for large-scale industrialisation.

“Infrastructure in Nigeria … is significantly behind other emerging market peers, with about $3 trillion needed over 30 years to close the gap,” global risk assessment firm Moody’s Investors Service said in a report published in November.

That leaves the minimum infrastructure spend at around $100 billion every year over three decades, roughly three times the size of the country’s 2021 budget, standing at $35.66 billion (N13.58 trillion).

President Muhammadu Buhari gave the go-ahead for the establishment of a $2.6 billion infrastructure company with a seed capital of N1 trillion that will run on a public-private partnership even though that commitment is just a drop in the ocean.

The DMO said it had succeeded in raising N362.57 billion in less than three years for road renovation and construction across Nigeria by way of the Sovereign Sukuk initiative.

Nigeria’s cumulative public debt ballooned to N32.915 trillion at the end of last year, the DMO said on Monday.

The country spends 83 per cent or more than four-fifths of its revenue on servicing debt even though the government said the total public debt to gross domestic product as of last December was 21.61 per cent and has restated its resolve to up the limit to 40 per cent in order to borrow more, defying analysts warning that the nation might be sinking beyond trace below its heap of debt.