By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-The Debt Management Office Nigeria (DMO) has said its ready to partner the Central Bank of Nigeria (CBN) on the Sukuk Bonds.

Joe, Ugoala, Head, Policy, Strategy & Risk Management of the DMO disclosed this Saturday in Lagos Nigeria at the 2013 Capital Market Correspondents Association of Nigeria (CAMCAN) Workshop with the theme “Transforming of the Bond Market and Its Benefits”.

Ugoala who represented Abraham Nwankwo, Director General (DG) of the DMO delivered a paper on his behalf titled “The Role of the DMO in the Transformation of The Bond Market” said the DMO is keen at diversifying the instruments they have in the Nigerian Capital Market (NCM) by introducing the sukuk bonds apart from going offshore to issue two more instrument such as the diaspora bonds and Global Depository Note (GDN).

“Beyond these, we are also working closely with the Central Bank to see how far we can also introduce what we call the sukuk bonds; which is another way of trying to diversify our instruments in the capital market,” Ugoala said.

The sukuk bonds since 2000 have become an important Islamic financial instrument in raising funds for long-term projects financing.

The sukuk bonds are structured in such a way as to generate returns to investors without infringing Islamic law which prohibits interest.

 A sukuk investor has a common share in the ownership of the assets linked to the investment although this does not represent a debt owed to the issuer of the bond.

However, sukuk holders are entitled to a share in the revenues generated by the sukuk assets.

The first sukuk were issued by Malaysia in 2000, followed by Bahrain in 2001.  Since then sukuk have been used by both the corporate sector and states for raising alternative financing.  While sukuk issuance was affected by the global financial crisis, since 2011, sukuk have been growing in popularity.