Nigeria’s Sukuk bond debt servicing rises from N8.17b to N33.13b
By Jeph Ajobaju, Chief Copy Editor
Rental paid for Sukuk bonds rose from N8.17 billion in the first quarter of the year ended March (Q1 2022) to N33.13 billion in Q2 2022, an increase of 305.51 per cent.
Sukuk is a Sharia-compliant bond-like instrument used in Islamic finance, according to Investopedia.
When an investor buys Sukuk bonds, the federal government gives them a certificate of ownership. The money is invested in assets across Nigeria, with the investor having a partial ownership.
Investors receive rental income on their investments and the government also makes a contract-binding promise to buy back the bonds at a specific future date.
The latest rental paid on Sukuk bonds are contained in domestic debt service report for each quarter compiled by the Debt Management Office (DMO), per The PUNCH.
DMO Portfolio Management Director Oladele Afolabi had earlier explained to the newspaper that although Sukuk is a non-interest loan, the government is expected to pay rent to investors during the tenure of loans.
“Government transfers its roads to Sukuk holders for that period. So, they become legal owners of that road. Government is now renting the roads from them so that citizens can travel on those roads.
“The government pays rent to the Sukuk holders based on an agreed rental rate payable every six months.”
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Schedule of rental payments
DMO Director General Patience Oniha clairified that “rental payments will be credited bi-annually, directly to the investors’ bank accounts as and when due.
“At maturity, the principal investment will also be credited directly to the bank accounts specified by the investors in their application forms.”
Abuja earned N1.77 trillion from Sukuk bonds between 2017 and 2021, per The PUNCH.
A separate document on the DMO website titled, “FGN Sukuk Rental Payment Dates”, disclosed that only one payment was made in Q1 2022, done on 26 March.
Three rental payments were made in Q2 2022 – on 16, 28, and 29 June.
Payment was to be paid in September in Q3 2022 and three are scheduled for December in Q4 2022.