Nigeria’s N150 billion sukuk more than four times oversubscribed

Nigeria’s Debt Management Office said on Friday it has concluded a N150 billion sukuk that was oversubscribed more than four times.

A sukuk is an Islamic financial certificate similar to a bond in Western finance. While in the traditional bond, the borrower (in this case the government) pays periodic interest on the capital, in sukuk, the issuer essentially sells a lender a certificate, and then uses the proceeds for a project that the lender is a part owner of.

The issuer will also promise to buy back the bond at a future date at par value.

The latest sukuk offer closed on Wednesday. The Islamic bond has a maturity time of 10 years and was offered at 15.75% to be paid twice a year.

The DMO said while the government sought N150 billion, it received a total subscription of N653 billion.

The DMO said it raised the amount it accepted to N350 billion.

The money will be used to finance the construction and rehabilitation of roads and bridges across the country, it said.

“This subscription level, which is 435% of the amount offered (N150 billion) shows that the level of awareness of the product has increased and that investors are willing to support the financing of infrastructure,” the debt office said.