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The Debt Management Office (DMO) said it will list Nigeria’s N162.557 billion sovereign sukuk on the Nigerian Stock Exchange (NSE) and FMDQ Securities Exchange today. The non-interest, Sharia-compliant bond was issued last year as part of the government’s efforts to raise funds to finance the revised 2020 budget.

The listing of the sukuk is to provide an opportunity for bondholders who would like to sell their stakes to trade them in the secondary market. The latest Nigerian Islamic bond has a coupon rate of 11.20 per cent and tenor of seven years.

"The Sukuk which at the time of issuance was massively subscribed to the tune of ₦669.124 billion or 446%, was issued to finance 44 economic road projects across the six (6) - geopolitical zones," the DMO said in a statement on Thursday.

Sukuks are Islamic financial instruments for raising long-term financing, without yielding interest for the sukuk holders. A sukuk holder is only entitled to a share in the revenues generated by the project or asset tied to the sukuk.   

The DMO issued Nigeria’s first sukuk in September 2017 as part of measures to deepen the domestic non-interest bond market and as an alternative infrastructure funding instrument following the decline in oil prices and fall in government revenues. After the debut N100 billion sukuk in 2017, the DMO issued another N100 billion sukuk in 2018. The agency said the proceeds of the two sukuks were used for the rehabilitation and reconstruction of road projects across Nigeria.

The latest sukuk is the third Islamic bond issuance in the country. The DMO said it has raised a total sum of N362.57 billion in less than three years from its sovereign sukuk initiative for the rehabilitation and construction of major roads in the country.

"In addition, by issuing Sovereign Sukuk, the product range available to investors in the domestic financial market has increased, while several retail investors have been attracted to the financial markets,” the agency said.

The sukuks, loans and other debt instruments deployed by the government to part-finance annual budgets account for the increase in public debt stock, which rose to N32.915 trillion as of December 31, 2020. The latest debt figure – released by the DMO on Monday – represents a debt-to-GDP ratio of 21.61 per cent. The country’s public debt has increased by N20.8 trillion (or 171.6 per cent) from N12.12 trillion recorded in June 2015.