* Osun State issues Nigeria's first sukuk -bankers
* Nigeria tapping into growing demand for Islamic debt
By Chijioke Ohuocha
LAGOS, Oct 2 Nigeria's Osun State has issued a
10 billion naira ($62 mln) sukuk yielding 14.75 percent, bankers
said on Wednesday, the first Islamic bond from a major economy
in sub-Saharan Africa.
The cocoa-producing, southwestern state of Osun received
11.4 billion naira in total subscriptions for its seven-year
paper, from asset managers and Islamic funds, bankers said. The
offer closed on Monday.
The yield offered was the same Osun State paid last year to
sell a conventional seven-year bond worth 30 billion naira.
Sukuk have become an increasingly popular investment
globally, particularly among cash-rich funds in the Gulf and
Nigeria's profile as Africa's most liquid debt market after
South Africa has been rising since JP Morgan and
Barclays included its bonds in their sovereign bond
indices in the last year, encouraging greater foreign
participation in its debt market.
Other African countries including South Africa, Kenya and
Senegal have been laying plans to issue a sukuk and Gambia has
been selling small amounts of Islamic debt for several years.
The sukuk is based on an ijara structure, a common leasing
arrangement in Islamic finance, which bans payment of interest.
Local credit rating agency Agusto & Co gave an A rating to
the sukuk, suggesting it will attract ample investor demand.
Bankers said earlier that Osun hoped the issue, which is
expected to be listed on the Nigerian Stock Exchange, would be
bought by both local pension funds and international investors.
In March this year, Nigeria's Securities and Exchange
Commission approved new rules facilitating issues of sukuk.
About half of Nigeria's 160 million people are Muslims,
giving it sub-Saharan Africa's largest Muslim population.