Securitization of the N22.7 Trillion Naira Ways and Means Advances at the Central Bank of Nigeria

Friday, 05 May 2023 08:31

Frequently Asked Questions

Terms

  • Tenor: Forty (40) years
  • Moratorium (on Principal only): Three (3) years
  • Interest Rate: 9% p.a.
  • Repayment: Amortizing over thirty-seven (37) years

Holder of the Securities

  • The Securities will be issued to the Central Bank of Nigeria (CBN) by the Federal Government of Nigeria (FGN).
  • The Securities will not be issued to the public by the FGN to raise funds.

Benefits of the Securitization

It will achieve the following:

  • Improve debt transparency as the securitized Ways and Means Advances will now be included in the public debt statistics.
  • It will reduce the Debt Service Cost as the new Interest Rate is 9% p.a. compared to the Monetary Policy Rate plus 3% which translates to 21.0% p.a. (MPR – 18.0% + 3%) currently being charged on the Ways and Means Advances.
  • The large savings arising from the much lower Interest Rate will help reduce the deficit in the Budget and expectedly, the level of New Borrowings.

Principal Repayments and Interests

Provisions for Interest on the securitized Ways and Means Advances (starting from 2023) and principal repayments starting from year four (4), will be made in the Annual FGN Budgets.

Other Clarifications

  • The securitization of the Ways and Means Advances does not involve new money being given to the FGN as the CBN had already provided the funds to the FGN.
  • Based on statutory provisions, the approval of the Senate and the House of Representatives are required for the securitization. Therefore, implementation will be upon receipt of the approval of the House of Representatives.

DEBT MANAGEMENT OFFICE

The Presidency

NDIC Building (First Floor),

Plot 447/448 Constitution Avenue,

Central Business District,

P.M.B. 532, Garki, Abuja

Tel: +234 - 8110000881-3

Website: http://www.dmo.gov.ng,

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

May 4, 2023

Press Release: N100 Billion Sovereign Sukuk Issuance For 2022 Closes on a High Note

Monday, 05 December 2022 07:28

The Debt Management Office (DMO) is pleased to inform the public of the successful conclusion of the Issuance of N100 Billion Sovereign Al ’Ijarah Sukuk. The Offer for N100 Billion opened on November 21, 2022 and was supported by wide public sensitization to encourage subscription from diverse investors, particularly the retail investors. The initial Offer size of N100 billion was upsized to N130 billion due to the over 165% Subscription level. The Sukuk was issued at a Rental Rate of 15.64% per annum. This brings the total Sovereign Sukuk Issuance to N742.557 billion as at date.

The level of subscription is evidence of investors’ confidence in the use and impact of Sukuk in the construction and rehabilitation of road infrastructure across the country. The proceeds of the 2022 Sovereign Sukuk, like the previous Sukuk Issue Proceeds, will be used solely for the construction and rehabilitation of key road projects through the Federal Ministry of Works and Housing and the Federal Capital Territory Administration.

The DMO appreciates all the investors (Retail Investors, Banks, Pension Fund Administrators, Assets/Fund Managers, Insurances Companies, Ethical Funds, Takaful Operators/Non-Interest Banks, Stockbrokers, Government Agencies, High Net Worth Individuals, Trustees and Unit Trusts) who have continued to support the Federal Government’s infrastructure development efforts through Sukuk financing. The strong participation of retail investor, ethical funds and non-interest financial institutions in this Sukuk Offering, attest to the fact that the Government’s objective of promoting financial inclusion through admitting more retail investors and ethical funds into the financial system is being achieved.

The DMO on its part, will work to sustain the laudable achievements recorded so far in the use of Sukuk Issue Proceeds for the construction and rehabilitation of Nigerian roads, and thereby, continue to enhance ease of commuting and doing business, safety on our roads, job creation, economic growth, and prosperity of our nation.

DEBT MANAGEMENT OFFICE

The Presidency

NDIC Building (First Floor),

Plot 447/448 Constitution Avenue,

Central Business District,

P.M.B. 532, Garki, Abuja

Tel: +234 - 8110000881-3

Website: http://www.dmo.gov.ng,

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

December 05, 2022


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