The Securities and Exchange Commission (SEC) on Wednesday said the sovereign Sukuk bond initially scheduled for third quarter of 2016 would now be issued in the first quarter of 2017.
SEC Director-General, Mr Mounir Gwarzo made this known at the commission’s Capital Market Committee (CMC) second quarter media briefing in Lagos.
The sovereign Sukuk bond is being packaged by SEC and the Debt Management Office (DMO).
Gwarzo said the DMO’s initial target was to issue Sukuk bond in 2016.
According to him, from the look of things the bond issuance will not be visible due to unforeseen circumstances.
“Initially, they were thinking about issuing a sovereign Sukuk bond this year, they are working toward the savings bonds and other infrastructural instrument and they have a timeline.
“From our discussion with them, it is very unlikely that a sovereign Sukuk will be issued this year.
“They are working toward it, but if they are not able to issue it this year, they are certainly looking at the first quarter of 2017,” Gwarzo said.
He said that the sovereign Sukuk bond, when launched, would enjoy all the tax concession granted to corporate bonds.
According to him, this move will encourage the issuance of sovereign Sukuk bond.
Gwarzo said that the Federal Inland Revenue Services (FIRS) had agreed to grant necessary tax concession to corporate bond on the proposed Sukuk bond.
Gwarzo had in January said that SEC and DMO had formed a committee to set up modalities for the first sovereign bond.
He said the commission was working with DMO to ensure the issuance of the bond in the third quarter of 2016.
He said that the commission would support DMO in capacity building to ensure successful issuance of the bond.
Gwarzo said that slide in crude oil price and drop in revenue generation made it imperative for government to look for alternative source of capital to finance infrastructure development.
“The need for alternative sources of capital to finance infrastructure becomes increasingly more compelling with fragility of growth from major emerging markets,” Gwarzo said.
He said that the country would attract significant amounts of affordable capital from the Gulf countries and other established world issuing a sovereign Sukuk bond.
According to him, SEC and DMO will collaborate on ways to address the country’s investment needs.
The director-general said that SEC would equally enable nominated staff of DMO to participate at the Capital Market Committee sub-committee on non-interest products to deepen their capacity.
He said that the bond, when issued, would send the much needed positive message to the market amidst the negative investor sentiment that persists currently.
Gwarzo predicted that Nigeria’s maiden sovereign Sukuk would be oversubscribed with enhanced participation of domestic and foreign investors.
When SEC released rules on Sukuk issuance in 2013, Osun State Government took advantage of the robust regulatory framework to issue the nation’s first Sukuk in which it raised N11.4 billion.