DMO, SEC aim for debut sovereign sukuk in 2016

The Debt Management Office (DMO) and capital market regulator  Securities and Exchange Commission, SEC, have agreed to collaborate on a debut issuance of sovereign Islamic bonds (sukuk) before the end of the year, the two bodies said.

The move could spur wider issuance of sukuk in one of Africa's most liquid debt markets, following similar sovereign deals from Senegal and Ivory Coast.

The DMO in a statement said the issuance of a sovereign sukuk was part of a strategic plan developed by the agency three years ago and it will now seek help from Nigeria's Securities and Exchange Commission in areas such as capacity building.

The statement further stated that issuing a sovereign sukuk will attract significant amounts of affordable capital from the Gulf countries and other established Islamic markets around the world into Nigeria.

The statement did not give a potential size for a maiden sukuk deal, although the DMO is a regular issuer of five- and ten-year local-currency bonds.

In 2013, Nigeria's Osun State issued 10 billion naira ($62 million) of sukuk, but no other sukuk transactions have followed.

Nigeria is home to the largest Muslim population in sub-Saharan Africa, with about half of its 160 million people members of the Islamic faith. It is also home to one of Africa's fastest growing consumer and corporate banking sectors.