Issuer: FGN Roads Sukuk Company 1
Obligor: Federal Government of Nigeria
Size: N150 billion
Structure: Ijarah sukuk
Tenor: 10 years
Banks: Greenwich Merchant Bank, Stanbic IBTC, Vetiva Capital Management (managers)
Date: October 2023
The Nigerian government has been at the forefront of growing and developing Islamic finance in Africa, largely through its efforts to cultivate a deep and liquid domestic sukuk market, the continent’s biggest by value and volume of transactions.
While this market is still small compared with other domestic markets in the Middle East and Asia, it has been growing and evolving over the past few years, thanks mostly to the regular issuance from the government via its debt management office.
Marking its sixth domestic sukuk in as many years, the Nigerian DMO returned to the market in October last year with a N150 billion ($110 million) 10-year sukuk, which drew an impressive N653 billion of demand from local investors, the highest level of interest so far.
Investor interest was supported by increased awareness and comfort with the structural complexity of sukuks
Aside from the high profit or a so-called rental rate of 15.75%, investor interest was supported by increased awareness and comfort with the structural complexity of sukuks, and investors’ desire to help support much-needed infrastructure investment in the country.
The proceeds from the sukuk will be used to finance the rehabilitation and construction of roads and bridges across the six geopolitical zones of the Federal Capital Territory, a central region of Nigeria, which includes the capital Abuja.
For further supporting Nigeria’s efforts to grow and develop shariah-compliant finance in the country and across the African continent, the deal is Africa’s Islamic deal of the year in 2024.
