The Federal Government of Nigeria has seen strong investor interest in its 2023 Series VI Sovereign Sukuk, an Islamic debt instrument aimed at financing road infrastructure projects. The offering, which was available for subscription from March 3 to October 11, 2023, raised a remarkable N652.827 billion. This subscription level represents 435% of the original amount offered, which was N150 billion.
Sukuk is an ethical, non-interest, asset-backed financial instrument based on the principles of Islamic finance. It was introduced in Nigeria’s road infrastructure financing in 2017.
The Debt Management Office (DMO) confirmed the success of the 2023 Ijarah Sukuk, a 10-year instrument designed to support road infrastructure financing. The N350 billion raised from the Sukuk issuance will be used to fund the construction and rehabilitation of roads and bridges across Nigeria’s six geopolitical zones and the Federal Capital Territory.
The offering had a rental rate of 15.75% per annum and is due to mature in October 2033. The issuance was conducted under the local loans (Registered Stock and Securities) Act on the authority of the Federal Government of Nigeria (FGN) Road Sukuk Company (FGN RSC 1).
Various financial institutions, including Greenwich Merchant Bank Limited, Stanbic IBTC Capital Limited, and Vetiva Capital Management Limited, were authorized to receive applications for the Sukuk. Buraq Capital Limited served as the Transaction Adviser to the issuance.
The success of this Sukuk issuance reflects the growing awareness of the product and investors’ willingness to support infrastructure financing through ethical, non-interest-based financial instruments. Since its introduction in 2017, Sukuk has played a significant role in financing road projects in Nigeria, helping to address the country’s infrastructure deficit. This Sukuk issuance marks another step towards bridging the infrastructure funding gap in Nigeria.
