The Nigeria government has unfolded plan of raising N170 billion through Islamic sukuk bond.
A notice to this effect, posted on the website of Debt Management Office (DMO), showed the fresh Islamic bond is a 7-year tenor at 11.20 per cent rental rate with bids opened on May 21, 2020.
The debt is being issued by a multipurpose vehicle called FGN Roads Sukuk Company 1 Plc., while FBNQuest Merchant Bank and Lotus Financial Service Limited are the financial advisors to the bonds.
In a public notice by the multipurpose company, the offer will close by June 2, while the settlement will be done by June 9.
“Proceeds will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country,” DMO’s public notice clarified.
Nigeria first raised its first Sukuk bond in 2017, worth N100 billion and was oversubscribed by more than 5.8 per cent.
The seven-year Islamic bond, which is structured as a lease and guaranteed by the government, fetched N105.87 billion in bids from retail and institutional investors, the DMO said.
The new proposal has N5.36 trillion budget deficit to be financed through borrowing from local and external sources and using proceeds from privatisation to bridge the gap.
The Federal Government is momentarily faced with dip revenue with potential of obstructing expenditure items espoused in 2020 budget.
The country is confronted with a twin challenges – the raging coronavirus pandemic and slump in the price of her major earning commodity, the oil.
As a way out, the government cuts its 2020 budget to N10.52 trillion from N10.59 trillion initially approved by the National Assembly.