The Commissioner for Finance in Katsina State, Alhaji Kasim Mutallab, has revealed that the State Government is set to secure a 7-year bond from the Islamic Development Bank worth N55 billion.
According to sources from the News Agency of Nigeria, the Commissioner revealed that the bond will be judiciously used to bridge the infrastructural gap in key sectors of the state economy, such as education and health.
Commenting on the recent development, Alhaji Mutallab said:
“Katsina state is looking to undertake a seven year bond, the bond will follow Islamic principles; there must be special purpose for securing the bond. We are looking at this bond because of the infrastructure deficits in the state in terms of roads, hospitals and education.”
The Islamic or sharia-compliant bond, also called Sukuk, is an interest-free Islamic financial certificate that represents a portion of ownership in a portfolio of eligible existing or future assets. They can be considered as an Islamic version of conventional bonds.
According to the Corporate Finance Institute (CFI), Sukuk does not represent a debt obligation. Upon its issuance, the issuer sells certificates to investors. Then, the issuer uses the proceeds from the certificates to purchase the asset, and investors receive partial ownership of the asset. The investors are also entitled to part of the profits generated by the asset.
Source Nairametrics