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CIS lists benefits of Sukuk bond

The Chartered Institute of Stockbrokers has described the Federal Government’s Sukuk bond as a wealth creation strategy in this period of COVID-19 pandemic.

The institute urged investors to partner with stockbrokers for investment advice on the processes and procedures for investing in the financial asset, whose ongoing sale is expected to end on June 2, 2020.

The CIS said this in a statement signed by its President and Chairman of Governing Council, Mr Tunde Amolegbe, and the Registrar and Chief Executive, Mr Adedeji Ajadi.

It said, “Sukuk Ijarah is a fixed-income security backed the Federal Government of Nigeria. This makes it an investment without risk as repayment of investors is guaranteed by the full faith and credit of the Federal Government of Nigeria, hence, the instrument as a gild hedge.

“Sukuk is highly sought after by ethical Investors. It provides a regular bi-annual tax-free payment for the period of the instrument while the principal will be paid at the end of the maturity period of seven years.”

According to the institute, the profit to investors is pre-determined at regular interval to enable them to enjoy steady cash flow.

It said, “Sukuk helps in redistribution of wealth. It is a risk management instrument, which is ideal for both speculators and investors. Speculators can sell before maturity. The instrument will help the government to finance large projects.

The CIS noted that the Federal Government of Nigeria had promised to invest the proceeds in specific road projects across the six geo-political zones of the country for the benefit of the citizens.

It encouraged investors to approach their stockbrokers to learn more about the instrument before making their investment decision.

It said, “Stockbrokers are very accessible and they are professionals equipped with skills and competencies in evaluating the risk and returns associated with such an instrument and will be able to guide investors accordingly.” – punch

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