07 Aug

Daily Watch – Sukuk recommended for Nigeria, Afren investors may lose investments

  • Standard and Poors, the ratings agency, is recommending that Sukuk bonds be considered for financing infrastructure needs in countries such as Nigeria. S&P however said that gaps in legislation are a challenging factor, and is leading to delays. Sukuk bonds are bonds that give the investor partial ownership in the asset on which the Sukuk are based, as opposed to the interest payment arrangements in the creditor-debtor relationship present in typical bond issues. Sukuk holders receive a share of profits from the underlying asset.
  • Investors expecting to retrieve any value from their holdings in Afren, are likely to be sorely disappointed, according to the Financial Times. People familiar with the company are predicting its stakes in key assets such as the Ebok and Okoro oilfields in Nigeria will be taken over by either the Nigerian government or its local business partners, and “there is a material risk that there might not be much to share at the end of the day”.
  • Shell has declared force majeure on gas supplies to Nigeria’s LNG export terminal on Bonny Island in Rivers State due to a pipeline leak, a spokesman for the company said. A spokesman for NLNG said that exports had so far been unaffected but that the company was discussing potentially rescheduling some shipments with its customers. NLNG produces 22 million metric tonnes of liquefied gas per year and has long-term supply contracts with buyers in Italy, Spain, Turkey, Portugal and France and also sells on the spot market.