Infrastructure Deficit: Lagos raises N137.3bn Capital Market Bond
All statutory instruments that will facilitate the raising of N137.328 billion bond by Lagos State Government from the capital market to deliver key infrastructure in critical sectors of the economy are now met. Governor Babajide Sanwo-Olu, on Monday, presided over the ceremony where all necessary documents required by the Securities and Exchange Commission (SEC) to […]
All statutory instruments that will facilitate the raising of N137.328 billion bond by Lagos State Government from the capital market to deliver key infrastructure in critical sectors of the economy are now met.
Governor Babajide Sanwo-Olu, on Monday, presided over the ceremony where all necessary documents required by the Securities and Exchange Commission (SEC) to facilitate the issuance of 13percent fixed rate bond were signed by the Lagos State Attorney General, Mr. Moyosore Onigbanjo, SAN; the issuing parties and trustees of the funds.
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The event marked the third time Lagos Government would be issuing a long-tenure bond of 10years (2021-2031), bringing to a total value of N377.715billion bond issued from the State’s Series IV N500billion Debt Issuance Programme.
The State set out to raise N125billion from the capital market but closed the bids with N137.3billion, following oversubscription.
According to Governor Sanwo-Olu, the development 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 disclosed that 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.
He further mentioned that 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.
“The signing ceremony finalises the issuance of N137.3billion bond at 13percent fixed rate in our Series IV Bond Issuance under the N500billion fourth Debt Issuance Programme. Lagos had maintained high discipline on the size and pricing of its bonds, just as the State also got clearance to proceed with the issuance as its coupon of 13percent yearly fell within the acceptable clearing bid.”
Sanwo-Olu 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, Dr. 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 N146.328billion value were received.
Olowo added that N137.328billion qualified under the terms of the offer at the clearing price of 13 per cent per annum.
He said: “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.”
The State Attorney-General and Commissioner for Justice, Mr. Moyosore Onigbanjo, SAN, who was represented by the Permanent Secretary, Mrs. Titilayo Shitta-Bey, said members of the State Executive Council, in the December 20, 2021 meeting, approved the resolution of the Government to issue the bond.
Representative of the 24 issuing parties and Managing Director of Chapel Hill Denham, Mrs. Kemi Awodein, described the bond as a ‘landmark transaction’ and largest to be issued by a non-federal government entity.