FGN Lists First Sovereign Sukuk on FMDQ OTC Securities Exchange

L-R: Ms. Tumi Sekoni, Associate Executive Director, Capital Markets, FMDQ OTC Securities Exchange; Mrs. Hajara Adeola, Managing Director/CEO, Lotus Financial Services Limited; Ms. Patience Oniha, Director-General, Debt Management Office of Nigeria and Mr. Kayode Akinkugbe, Managing Director/CEO, FBNQuest Merchant Bank Limited, during the Listing Ceremony for the ₦100.00bn Federal Roads Sukuk, on FMDQ OTC Securities Exchange in Lagos.

April 10, 2018/FMDQ OTC

In acknowledging the crucial role infrastructure plays in enabling sustainable development and enhancing quality of life and business activities, the Federal Government of Nigeria (FGN) through the Ministry of Finance (MoF) and the Debt Management Office (DMO), again demonstrated its unrelenting commitment to the development of Nigeria’s infrastructure sectors via the Nigerian debt capital markets (DCM), by listing the first sovereign Sukuk in the Nigerian DCM, the ₦100.00bn Federal Roads Sukuk Company 1 PLC 7-Year 16.47% Ijarah Sukuk due 2024 on FMDQ OTC Securities Exchange (FMDQ or the OTC Exchange). The proceeds from the issuance of this Sukuk will be used to construct and rehabilitate ear-marked roads across the six (6) geopolitical zones of Nigeria. This is yet another commendable feat for the FGN, with the MoF and DMO, in their respective roles, championing development in the Nigerian DCM. Being the pioneer sovereign Sukuk, this issuance will set the pace for other arms of government and the private sector planning to issue noninterest-bearing securities.

To formally welcome the listing of the pioneer Sukuk to its platform, the OTC exchange held an impressive and memorable Ceremony to commemorate and honor the issuer, the FGN, represented by the DirectorGeneral of the DMO, Ms. Patience Oniha, along with key representatives from the DMO. Also present at the Ceremony were the co-sponsors to the issue on FMDQ and Registration Members of the OTC Exchange, FBNQuest Merchant Bank Limited, represented by its Managing Director/CEO, Mr. Kayode Akinkugbe and Lotus Financial Services Limited, represented by Mrs. Hajara Adeola, Managing Director/CEO, and other parties to the issue.

Welcoming the guests to the Ceremony, Mr. Emmanuel Etaderhi, Senior Vice President, Economic Development Division, FMDQ, congratulated the issuer and co-sponsors to the issue, stating that the issuance will further deepen the domestic DCM and increase the range of investible debt securities in the markets, invariably contributing to the development of the nation. He further commented that listing the Sukuk on FMDQ would rightly position the nation to continue to maximise its potential via the Nigerian DCM. He reiterated the OTC Exchange’s commitment to continue to support the initiatives of the DMO towards the development of a highly liquid, deep and well-developed DCM in Nigeria.

Ms. Patience Oniha, Director-General of the DMO, during the issuer’s special address, stated, “the DMO in pursuit of its objectives to diversify the sources of government funding and deepen the domestic capital market, successfully issued the debut N100.00bn 7-Year Sovereign Sukuk on September 26, 2017. The purpose of the Sukuk is to integrate ethical investors into the domestic securities market, establish benchmark for pricing of Sukuk by other domestic issuers and offer investors the opportunity to earn returns while contributing to the infrastructure development of the country. The proceeds are being deployed for the construction and rehabilitation of twenty-five key economic roads projects across Nigeria’s six geopolitical zones. The listing of the sovereign Sukuk on FMDQ will provide investors with the much needed transparent and efficient platform for price determination and liquidity.”

Delivering the Registration Member (Listings) remarks, Mr. Kayode Akinkugbe, highlighted, “we are pleased to have advised the FGN on its N100.00bn debut Sukuk issuance, and despite fairly volatile market conditions, we leveraged FBNQuest Merchant Bank’s superb distribution platform to successfully distribute about 65% of the offer. The ₦100.00bn Sukuk issuance is the first attempt by the Federal Government to raise funds through non-interest instrument in the capital markets for infrastructure development. This is also expected to deepen the Nigerian capital markets and diversify the government funding sources. Listing the FGN Sukuk on FMDQ, will provide investors with a transparent and efficient platform for price determination, liquidity and execution of trades.”

Similarly, co-sponsor and Registration Member (Listings), Lotus Financial Services Limited, represented by Mrs. Hajara Adeola, during her remarks stated, “the FGN N100.00bn Sukuk has been instrumental in financing road projects, while ensuring socio-economic development and financial inclusion. With this listing, the Sukuk will trade like other FGN securities through registered brokers and dealers on the Exchanges. Investors who were unable to purchase Sukuk during the offer can now do so at the secondary market, while others who require liquidity can sell their Sukuk. We applaud the efforts of all the stakeholders including the FGN, MoF, Ministry of Power, Works and Housing, DMO, the transaction parties and the Exchanges for their tireless efforts to bring diversity to the Nigerian DCM.”

Ms. Tumi Sekoni, Associate Executive Director, Capital Markets, FMDQ, whilst giving the closing remarks, applauded the issuer for achieving this milestone, stating that this was another highly laudable step by the Sovereign, through the DMO towards supporting the growth and development of the nation’s DCM. She also commended the co-sponsors to the issue and Registration Members of FMDQ for their concerted efforts towards ensuring the success of the issuance. According to Ms. Sekoni, the issuance will pave the way and encourage non-sovereign issuers to explore the issuance of non-interest-bearing securities, thereby adding to the depth and breadth of the domestic capital markets. She further commented that the listing of the pioneer sovereign Sukuk on FMDQ will serve as a benchmark for the pricing of subsequent Sukuk issuances. She highlighted that the OTC Exchange, recognising the extraordinary opportunities non-interest finance provides in the DCM, will remain steadfast in its commitment towards the development of all facets of the Nigerian DCM, and by extension, the economy at large.”

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