NIGERIA TO ISSUE N100 BN ISLAMIC BOND THIS MONTH

Nigeria's Debt Mangement Office (DMO) will this month issue its first ever Islamic non-interest bond (Sukuk) in the form of N100bn ($328m) 7 year non-interest bearing bond.

According to the Securities and Exchange Commission (SEC) the proposal has been approved and was indeed encouraged by SEC to help deepen the Nigerian capital market just as African countries like South Africa; Senegal and Cote'd Ivoire have done in recent past.

In 2013, SEC had issued the guidelines for the issuance of Sukuk in Nigeria following which Osun state government successfully issued the very first such bond in Nigeria raising N11bn  from the capital market and it was oversubscribed says SEC.

The Central Bank of Nigeria has also since issued its own guidelines on Sukuk permitting banks to compute them among liquid assets and providing a discount window to any one who may want to discount his holding before it falls due.

The National pension Commission, says SEC, has also approved Sukuk as financial instruments pension funds can invest in .

Sukuk are useful in funding infrastructure especially when returns are not likely to be high and more for their social service provision relevance.

Sukuk also allows those averse to interest bearing instruments because of their religious inclination to have a window through which to participate in the Nigerian capital market since most of the other instruments are either profit or return driven.

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