- The federal government through the DMO has revealed that its Sukuk bond offer attracted 346% over subscriptions
- Sukuk represent ownership interest in particular assets(roads) while bonds represent a pure debt obligation due to be paid back.
- An oversubscription of any sale of security especially government security indicates demand for government bonds remains high
The federal government has expressed excitement that more Nigerians were willing to lend to the government for infrastructure development.
The Sun Newspaper reports that the Debt Management office on Friday, 24 December revealed that its N250 billion Sovereign Sukuk bond offer, which commenced on December 16, 2021 and completed on December 23, 2021, achieved an unprecedented subscription level of N865 billion.
This result reflects a 346 percent subscription level, or an N615 billion oversubscription it noted.
How it happened?
Analysis of the data from DMO website showed significant levels of subscription came from banks and fund managers (including pension funds), as well as non-interest financial institutions, ethical funds, cooperative organizations, and retail investors.
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The increasing level of participation by a more diverse and larger number of investors is a confirmation that the DMO’s objectives of issuing Sovereign Sukuk to grow the domestic investor base and promote financial inclusion is being achieved.
DMO also noted that the high subscription level is proof of investors’ acknowledgement of the impact the N362.57 billion Sovereign Sukuk issued between 2017 and 2020 has had on the development of road infrastructure in Nigeria.
The Debt office reaffirmed that the proceeds of the N250 billion Sovereign Sukuk will be used to finance the rehabilitation and reconstruction of road projects across the six geopolitical zones and the Federal Capital Territory (FCT).
Where will the money go into
On how the money realised from the Sukuk offering will be spent, the Director General of DMO, Patience Oniha, said N200 billion will be allocated for specific projects.
“For the FCT, N37 billion was disclosed for those of us who live in Abuja. There is a Ministry of Niger Delta that has N75 billion included in those roads.
On whether the Sukuk deal was captured in the 2021 budget, she said
“there is a N3.143 trillion of new domestic borrowing in the 2021 budget and the supplementary budget. We have raised the other money. What is remaining is N250 billion and that is Sukuk”.
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The Debt Management Office (DMO) announced Nigeria's overall public debt has risen to N38 trillion as of September 30, 2021.
The loan from China is one area many Nigerians are interested in amid stories of assets being seized from nations unable to repay their debt.
DMO has now released a thorough analysis of loans received from China in the last 13 years, including how much has been returned and for what projects the funds were obtained.