Market News

BY  Hope Moses-Ashike 

…Plans N300bn for series 7

Nigeria’s Debt Management Office (DMO) has hit a major milestone, surpassing N1 trillion in sovereign Sukuk bond issuances as investor appetite continues to grow.

The achievement underscores the growing appeal of ethical finance in Africa’s largest economy and signals confidence in the government’s infrastructure-backed debt instrument.

The DMO on Wednesday disclosed plans to raise N300 billion through Series Seven (VII) Sovereign Sukuk issuance for capital projects nationwide, marking the highest issuance since inception in 2017.

Patience Oniha, Director-General of the DMO, made the disclosure at an all-parties meeting in Lagos, reinforcing the agency’s commitment to leveraging Sukuk to bridge Nigeria’s infrastructure deficit.

Nigeria’s foray into sovereign Sukuk began in 2017 with an initial issuance of N100 billion, which was marginally oversubscribed at N105.88 billion. Subsequent issuances steadily increased—N100 billion in 2018, N150 billion in 2020, N250 billion in 2021—before adjusting to N100 billion in 2022 and N150 billion in 2023.

Between September 2017 and December 2023, the DMO successfully raised a total of N1.092 trillion through Sukuk, with proceeds channelled into critical infrastructure.

More than 4,100 kilometers of roads and nine bridges across Nigeria’s six geopolitical zones, including the Federal Capital Territory, have been constructed or rehabilitated through the program.

“These projects have yielded substantial economic benefits,” Oniha noted. “We have seen reduced travel time, improved road safety, job creation, better access to markets for remote farmers, and increased connectivity to essential public services such as education and healthcare.”

Investor confidence and market impact

Beyond its role in infrastructure financing, Sukuk has emerged as a sought-after asset in Nigeria’s financial market. According to Oniha, while the DMO has issued over N1 trillion in Sukuk bonds, total investor subscriptions have exceeded N2 trillion, reflecting an overwhelming demand for the instrument.

The appeal of Sukuk lies in its unique structure—unlike conventional bonds that pay interest, Sukuk investors receive returns generated from the infrastructure projects they help finance. Payments are made biannually, offering a steady and predictable income stream.

With Nigeria’s financing needs expanding amid fiscal constraints, the strategic issuance of Sukuk is also deepening the country’s domestic debt market while promoting financial inclusion. “The Sukuk is project-tied, ensuring transparency and accountability, and it contributes to the overall development of ethical finance in Nigeria,” Oniha stated.

Regarding repayments, she noted the Sukuk that matured in September last year has already been fully repaid, as previously announced. The returns on Sukuk are structured to be competitive with other securities, making it an attractive investment option for investors.

The N300 billion issue on offer currently follows a well-coordinated approach, with collaboration across issuing houses, legal advisers, and trustees. The agency is fine-tuning strategies on issuance timing, investor engagement, and marketing to ensure another successful offer.

“Today’s strategic meeting is crucial for planning and execution. Once we align on key parameters, a target date for the public issuance will be announced,” Oniha said.