…Lagos debt profile rises to N671 bln after bond issuance
…Sustains position as most indebted state in Nigeria
Lagos, Nigeria’s economic hub on Monday announced that it has raised a total of N137.33 billion 10-year bonds to boost the development of infrastructure in the state.
At a completion board meeting where where document to that effect was signed, Governor Babajide Sanwo-Olu said all statutory instruments that will facilitate the raising of N137.328 billion bond by the state government from the capital market to deliver key infrastructure in critical sectors of the economy are now met.
At the ceremony, necessary documents required by the Securities and Exchange Commission (SEC) to facilitate the issuance of the 13 percent fixed rate bond were signed by the State’s Attorney General, issuing parties and trustees of the funds.
In a statement by the chief press secretary to the state governor, Gboyega Akosile, said the event marked the third time Lagos Government would be issuing a long-tenure bond of 10 years (2021-2031), bringing to a total value of N377.715 billion bond issued from the Lagos State’s Series IV N500 Billion Debt Issuance Programme.
The statement said the State set out to raise N125 billion from the capital market but closed the bids with N137.3 billion, following oversubscription.
The development, Sanwo-Olu said, demonstrated a “strong response” from the investing community and testified to confidence of investors in the State’s ability to deliver on its infrastructural and socio-economic developmental objectives, while meeting repayment obligations.
The Governor said proceeds from the bond would be used to finance key infrastructure projects in healthcare, environment and road construction, including the 10-km Regional Road in Eti Osa, six-lane Lekki-Epe Expressway, Ijeododo Road in Alimosho and Oba Sekumade Road in Ikorodu, among others.
Sanwo-Olu said the iconic projects for which the funds would be earmarked would contribute to a better quality of living for the residents, while also creating a more enabling environment for commercial and economic activities.
“Lagos once again marks another milestone in the domestic debt capital markets, with the issuance of the largest bond ever by a sub-national Government in Nigeria.
“The signing ceremony finalises the issuance of N137.3 billion bond at 13 percent fixed rate in our Series IV Bond Issuance under the N500 Billion Fourth Debt Issuance Programme.
“We set out to raise up to N125 billion, but we closed the book with bids totalling N137.3 billion. This is a strong response from the investing community to our administration’s debut bond issuance.
“This humbling achievement is a testament to continued investors’ confidence in the State’s ability to deliver on its infrastructural and socio-economic developmental objectives, and also to meet repayment obligations.
“In line with our vision to build a Greater Lagos, proceeds from this bond will be used to finance infrastructure projects, primarily in roads, environment and healthcare.
“These projects include 10-km Regional Road in Eti Osa, six-lane Lekki-Epe Expressway, Ijeododo Road in Alimosho and Oba Sekumade Road in Ikorodu. These will contribute to a better quality of living for our people, while also creating a more enabling environment for commercial and economic activity,” Sanwo-Olu said.
The governor said there had been multiplier effects in socio-economic activities felt from the previous intervention capital raised justified the cost of investment in critical sectors.
He said Lagos had maintained high discipline on the size and pricing of its bonds, noting that the State got the clearance to proceed with the issuance as its coupon of 13 percent yearly fell within the acceptable clearing bid.
The Governor disclosed that the issuance process started in April based on the advice of the State’s transaction advisers.
With the issuance of the third bond, Sanwo-Olu said the imperative to aggressively drive his administration’s THEMES agenda had been boosted, pledging to deliver more iconic projects would be raise the value of the State’s economy.
The Governor applauded the Federal Ministry of Finance, SEC, National Pension Commission (PENCOM) and Debt Management Office for supporting the State’s infrastructure drive.
Commissioner for Finance, Rabiu Olowo, gave summary of the bid book in respect to the bond, pointing out that 319 bids were submitted during the offer period, while total bids at N146.328 billion value were received.
Olowo said N137.328 billion qualified under the terms of the offer at the clearing price of 13 percent per annum.
“In April 2021, we accelerated an ongoing conversation on the need to quickly intervene on the huge infrastructure gap in the face of limited financial resources. We took advantage of the favourable investment climate in the capital market to initiate a bridge to finance transaction by redeeming and refinancing the existing bonds
“It is fulfilling to note that despite the hurdles that were faced, we have been able to achieve the target we set for ourselves.
“In fact, we exceeded the target. Many thanks to Mr. Governor for his timely intervention at different phases. This is undoubtedly another momentous transaction for Lagos,” the commissioner said.
It would be recalled that data from the Debt Management Office (DMO) showed that the state’s total debt stood at N532.12 billion at the end of third quarter of the year, slightly down 0.31 percent from N533.81 billion at the end of the second quarter of 2021.
With the fresh debt raise, the state has further increased its debt profile and sustained its position on top of the list of most indebted subnational in the country.