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DMO Issues Fresh N250bn Sukuk To Finance Road Projects

Oluwasina Phillip

The Debt Management Office has flagged off the issuance of the Federal Government’s N250bn Sukuk bond.

The N250bn bond issuance is specifically to finance road projects across the six geo political zones of the country.

With the issuance of the N250bn Sukuk, the DMO has successfully bring to a close the N3.143trn domestic borrowing contained in the 2021 budget.

The N250bn Sukuk Bond offer was unveiled to both institutional and private investors at an investors’ forum in Abuja.

Speaking at the forum, the Director- General of DMO, Ms. Patience Oniha, explained that the N250bn Sukuk has two other ministries- Federal Capital Territory ( FCT) and the Ministry of Niger Delta as the issuing agency.

This is unlike previous Sukuk bond that had only Federal Ministry of Works and Housing as sole government’s agency to utilize the proceeds for road construction.

Among the roads listed for construction by the Federal Ministry of Works and Housing, include, Abuja-Lokoja road section iv (koton karfi-lokoja); dualisation of Obajana junction to Benin phase 2: section 1 (Obajana junction to Okene); construction of Oju/Loko-Oweto bridge to link Loko and Oweto with approach roads; and Makurdi – Naka – Adoka – Ankpa road in Benue state.

Others are the construction of Baro Port to Gulu Town in Niger State and reconstruction of Nasarawa -Loko road in Nasarawa State section amongst others.

The ministry has road projects to construct across the six geo-political zones of the country.

Speaking during an interview with journalists, Oniha said, “The DMO had issued three Sukuk previously- 2017, 2018 and 2020, raising a total of N362.57bn to finance road projects across the six geo-political zones of the country.

“That has been extremely successful and has both the DMO as the face of government for borrowing and others. The average citizen on the road has been impressed with what the sukuk has contributed to the economic growth and development.

“It has now become one of the instruments with which we raised money for the federal government. DMO on behalf of federal government is offering Sukuk of N250bn to investors. Whether they be retail investors, institution or town associations, cooperative or banks. Whichever, insurance companies or pension funds.

“We are open, we are using Sukuk to raise money for the government to finance road projects. Sukuk is different from other securities we issued in the market.

“With these ones, we are financing specific projects. And under the requirements for issuing non interest products, we need to tell you what it is we are financing”

The Sukuk is a ten years tenor with 12.80 percent coupon.

In his remark, Managing Director of Greenwich Merchant Bank, Mr. Bayo Rotimi expressed hope of the bond over subscription.

The Company is the Financial Adviser to the offer.

He said Sukuk bond has become integral part of financing instrument of government.

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