Amid concerns of an increasing debt profile, the Debt Management Office (DMO) has launched a new N300 billion Sovereign Sukuk bond.

This is even as the government has so far borrowed N10.85 trillion from the domestic market in the first four months of 2025, fueling concerns about elevated debt service obligations.

The government, while launching the new sukuk yesterday, said it is determined to narrow the country’s estimated N18 trillion Road infrastructure deficit. It said the Sukuk issuance is part of efforts to diversify the government’s funding sources and accelerate the pace of infrastructural development.

Between 2017 and December 2023, the government raised over N1.09 trillion from six series of Sukuk, and this was invested in the construction or rehabilitation of roads across the country.

So far, according to the Director General of the Debt Management Office (DMO), Ms. Patience Oniha, over 4,100 kilometers of roads and nine bridges across the six geopolitical zones and the Federal Capital Territory have been either constructed or rehabilitated.

The new N300 billion Sovereign Sukuk is a seven-year Sukuk due 2032; a non-interest, alternative instrument designed in the form of annual rental income. The annual rental income is 19.75 per cent.

DMO, which oversees Nigeria’s government debt issuances and management, indicated yesterday that the offer which opened yesterday with a minimum subscription of N10,000, will close on May 20, 2025.

It is also being offered at N1,000 per unit, subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter.

The rental payment will be made half-yearly, while the bullet repayment will be made on the date of maturity.

Oniha said the government recognised the need to issue more Sukuk bonds, given the increasing success and strong investors’ appetite for the alternative non-interest bonds.

According to her, the Sukuk initiative by DMO, which oversees national debt management, has been increasingly successful, given the strong level of awareness that has been created.

She attributed the success of the Sukuk issuances to the increased confidence from market participants, given that the Sukuk bonds are tied to specific projects that can be tracked.

“Looking ahead, we recognise the need to upscale issuances to include other standalone projects beyond road infrastructure, but more importantly, we are looking to support projects that are revenue-generating to service the Sukuk,” Oniha said.

Meanwhile, the Federal government has shown its preference for borrowing from the domestic market because of the high cost of foreign loans. The government has so far borrowed N10.85 trillion from the domestic market in the first four months of 2025.

A breakdown of the borrowings shows that Treasury Bills accounted for the bulk of the borrowings with N8.377 trillion, while FGN savings bonds accounted for N2.5 trillion.

The Federal Government borrows from domestic investors through the issuance of FGN Bonds, FGN Savings Bonds, and Sukuk Bonds by the Debt Management Office, DMO.

In addition to these are the Nigerian Treasury Bills, NTBs, issued by the CBN on behalf of the Federal Government.