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FGN SET TO ISSUE A SECOND N100 BILLION SOVEREIGN SUKUK IN DECEMBER 2018

The Debt Management Office of Nigeria (DMO) has announced that the Federal Government of Nigeria would in December 2018, float another N100 billion Sovereign Sukuk, being the second Sovereign Sukuk issuance by the Federal Government.

According to the Director General of the DMO Patience Oniha, “June was when the budget was approved and Sukuk is a project that was also approved in the budget. We will float it; we have made significant progress; we will issue it this year.”

According to Oniha, the DMO was working with the Ministry of Power, Works and Housing on the projects earmarked for the utilisation of the proceeds of the second issuance. She also expressed optimism that the bond would be oversubscribed, based on the feelers from investors and the public.

“…in terms of Sukuk, I think from the feelers we have got from investors and the public, it is a product the people want to associate with.” – Oniha

Sukuk are Islamic bonds, structured in such a way as to generate returns to investors without infringing Islamic law that prohibits riba (interest).

The proceeds from Sukuk issuances are often used to construct and rehabilitate infrastructure.

You will recall that the debut Sovereign Sukuk Issuance by the Federal Government through the Debt Management Office (DMO), was issued in October 2017 and the proceeds were used to fund the rehabilitation and construction of roads across the country, including the Ibadan-Ilorin Road, Kolo-Otuoke-Bayelsa-Palm Road, Enugu-Port/Harcourt Road, Kaduna Eastern By-Pass, Kano-Maiduguri Road and Loko-Oweto Bridge over River Benue, among others.

SEC RELEASES REGULATIONS ON GREEN BONDS

The Securities and Exchange Commission (SEC) on Friday 19th October 2018 released the long-awaited rules on Green Bonds.

HIGHLIGHTS OF THE REGULATIONS

Qualification

As provided in the regulations, to qualify as a green project, proceeds of the proposed green bond shall be intended to be invested in one or more of the following:

a) Renewable and sustainable energy

b) Clean transportation

c) Sustainable water management

d) Climate change adaptation

e) Energy efficiency

f) Sustainable waste management

g) Sustainable land use

h) Biodiversity conservation

i) Green buildings (Commercial Real Estate Development)

j) Any other categories as may be approved by the Commission from time to time.

Conditions for approval of a Green Bond

In addition to the general registration requirements for debt issuances as stated in the Rules and Regulations of the SEC for States, Local Governments, Government, Corporate and Supra-national agencies, an issuer of a Green Bond shall file:

i. A letter from the issuer committing to invest all the proceeds of the bond in projects that qualify as green project(s) or assets in line with this rule

ii. A feasibility Study and Report stating clearly, the measurable benefits of the proposed Green project or Assets such as Green House Gas reduction, reduction of water use and reduction of harmful emissions.

iii. A prospectus which shall include project categories, project selection criteria, decision-making procedures, environmental benefits, use and management of the proceeds.

iv. An independent assessment or certification issued by a professional certification authority or person approved or recognized by the Commission.

v. Any other documents that may be required by the Commission

   Utilization and Management of Proceeds

i. The net proceeds shall only be utilized for the purpose stated in the approved offer documents and shall be tracked as stated in the approved internal policy of the Issuer which shall be disclosed in the offer documents.

ii. An escrow account shall be opened specifically for the net proceeds of the offer.

iii. The proceeds shall be domiciled with the Custodian and the Trustees shall ensure that the proceeds are used for the purpose stated in the prospectus.

iv. The issuer and the Trustees shall be the signatories to the escrow account.

v. The issuer shall invest proceeds in green projects within the given timeframe prescribed in the prospectus.

vi. Unallocated proceeds shall be invested by the Trustees in money market instruments with investment grade rating that do not include greenhouse gas intensive projects which are inconsistent with the delivery of a low carbon and climate resilient economy.

Reporting

The issuer shall provide to the Commission and Stock Exchange (where listed), at least annually, a Green Bond Report containing the list of the projects and assets to which proceeds have been allocated, for the duration of the bond. The reporting process and authority shall be documented and maintained as part of the issuer’s Green Bond Framework. The Green Bond Report shall include:

A.            A brief description of the projects and the amounts disbursed, including (where possible) the percentage of proceeds that have been allocated to different eligible sectors and project types and to financing and refinancing. Where confidentiality agreements or competition considerations limit the amount of detail that can be disclosed, the information may be presented in generic terms.

B.            The expected impact of the project and assets

C.            Qualitative performance indicators and, where feasible, quantitative performance measures of the impact of the projects

D.            The methodology and underlying assumptions used to prepare performance indicators and metrics shall be disclosed.

The issuer shall publish an assessment report issued by an independent professional assessment or certification agency on its website or other media and conduct and report annual follow-up assessments of the green projects and associated environmental benefits throughout the tenor of the bond and publish same in its annual report and on its website or other media, a copy of which should be filed with SEC.

Refinancing

Where the issuer proposes to utilize a proportion of the issue proceeds of the issue of Green Bonds, towards refinancing of existing green assets, the Issuer shall clearly provide in the offer document the details of the portfolio/assets/projects which are identified for such refinancing, and, to the extent relevant, the expected look-back period for refinanced projects.

SUMMARRY OF OCTOBER 2018 FGN BOND AUCTION RESULTS

Auction Result for the 12.75% FGN APR 2023 (Re-opening 5-year Bond), 13.53% FGN MAR 2025 (Reopening 7-Year Bond) & 13.98% FGN FEB 2028 (Re-opening 10-Year Bond)

Successful bids for the 12.75% FGN APR 2023, 13.53% FGN MAR 2025, and 13.98% FGN FEB 2028 were allotted at the Marginal Rates of 15.000%, 15.1500%, and 15.3200%, respectively.

However, the original coupon rates of 12.75% for the 12.75% FGN APR 2023, 13.53% for the 13.53% FGN MAR 2025 and 13.98% for the 13.98% FGN FEB 2028 will be maintained.

 

DOLLAR EXCHANGE RATE REPORT 15THTH OCTOBER TO 26TH OCTOBER 2018

This report is a compilation of the dollar exchange rate at the official and parallel market from the 15th of October to the 26th of October 2018.  The quoted parallel market prices are to serve as a guide to readers, as they represent the average price obtained daily from different black-market dealers in the Country.

S/N

DATE

CURRENCY

OFFICIAL RATE  N

PARALLEL MARKET RATE

N

 

 

 

 

BUY

SELL

  1.  

26/10/2018

DOLLAR

306

360

362

  1.  

25/10/2018

DOLLAR

306

360

362

  1.  

24/10/2018

DOLLAR

306

360

362

  1.  

23/10/2018

DOLLAR

306

360

362

  1.  

22/10/2018

DOLLAR

306

360

362

  1.  

19/10/2018

DOLLAR

306

360

362

  1.  

18/10/2018

DOLLAR

306

359

361

  1.  

17/10/2018

DOLLAR

306

359

361

  1.  

16/10/2018

DOLLAR

306

359

361

  1.  

15/10/2018

DOLLAR

306

359

361

 

 

 

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