Home SOCIETY GIST COMMUNITY GIST LAGOS STATE RAISES CAPITAL MARKET BOND OF N137.3 BILLION TO FUND INFRASTRUCTURE DEFICIT

LAGOS STATE RAISES CAPITAL MARKET BOND OF N137.3 BILLION TO FUND INFRASTRUCTURE DEFICIT

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By Aishat Momoh. O.

All statutory instruments that will enable the Lagos State Government to raise N137.328 billion in the capital market to fund important projects in crucial areas of the economy have now been met.

On Monday, Governor Babajide Sanwo-Olu presided over a ceremony at which the State’s Attorney General, issuing parties, and trustees of the funds signed relevant paperwork required by the Securities and Exchange Commission (SEC) to permit the issue of a 13% fixed rate bond.

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The occasion marked the third time the Lagos Government would issue a 10-year bond (2021-2031), raising the total value of the Lagos State’s Series IV N500 Billion Debt Issuance Programme to N377.715 billion.

The government wanted to raise N125 billion from the capital market, but the bids were oversubscribed, resulting in a total of N137.3 billion. The development, according to Sanwo-Olu, exhibited a “strong response” from the investing community and demonstrated investors’ trust in the State’s ability to accomplish its infrastructural and socio-economic development goals while also satisfying repayment obligations.

The proceeds from the bond, according to the Governor, will be used to fund key infrastructure projects in healthcare, the environment, and road construction, including the 10-kilometer Regional Road in Eti Osa, the six-lane Lekki-Epe Expressway, Alimosho’s Ijeododo Road, and Ikorodu’s Oba Sekumade Road.

The iconic projects for which the monies will be designated, according to Sanwo-Olu, would improve citizens’ quality of life while also creating a more conducive atmosphere for commercial and economic operations.

“With the issuing of the largest bond ever issued by a sub-national government in Nigeria, Lagos once again achieves another milestone in the domestic debt capital markets,” he said. The signing ceremony completes the issuing of a N137.3 billion bond with a fixed rate of 13% in our Series IV Bond Issuance, which is part of the N500 billion Fourth Debt Issuance Program.

“We planned to raise up to N125 billion, but we ended up with N137.3 billion in bids.” The investment community has reacted positively to our administration’s first bond offering. This humbling achievement reflects investors’ sustained faith in the State’s ability to satisfy its infrastructure and socioeconomic development goals, as well as its repayment responsibilities.

“Proceeds from this bond will be utilized to finance infrastructure projects, primarily in the areas of roads, the environment, and healthcare, in keeping with our ambition to establish a Greater Lagos.” The 10-kilometer Regional Road in Eti Osa, the six-lane Lekki-Epe Expressway, Ijeododo Road in Alimosho, and Oba Sekumade Road in Ikorodu are among these developments. These will help to improve our people’s quality of life while also making the environment more conducive to commercial and economic development.”

According to Sanwo-Olu, the prior intervention capital collected produced multiplier effects on socio-economic activities, justifying the cost of investment in vital areas. He claimed that Lagos had kept a tight rein on the size and pricing of its bonds, saying that the State was given permission to proceed with the offering because its annual coupon of 13% was within the permissible clearing bid.

According to the Governor, the issuing procedure began in April on the advice of the State’s transaction consultants. With the issuing of the third bond, Sanwo-Olu said the urgency to aggressively advance his administration’s THEMES agenda has been reinforced, promising to deliver more iconic projects to enhance the State’s economy.

The Governor praised the Federal Ministry of Finance, the Securities and Exchange Commission (SEC), the National Pension Commission (PENCOM), and the Debt Management Office for their support of the State’s infrastructure initiative.

 

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Dr. Rabiu Olowo, the Commissioner for Finance, delivered a summary of the bid book for the bond, noting that 319 bids were submitted during the offer period, with a total bid value of N146.328 billion.

According to Olowo, at the clearing price of 13% per annum, N137.328 billion qualified under the conditions of the offer.

“We expedited a continuing discourse on the necessity to immediately intervene on the massive infrastructure deficit in the face of limited financial resources in April 2021,” he stated. By redeeming and refinancing the existing bonds, we took advantage of the favorable investment atmosphere in the capital market to launch a bridge to finance transaction.

“It’s gratifying to know that, despite the challenges we faced, we were able to meet the goal we set for ourselves.” In fact, we surpassed our goal. Thank you very much, Mr. Governor, for your timely intervention at various stages. This is unquestionably a watershed moment for Lagos.”

Mr. Moyosore Onigbanjo, SAN, State Attorney-General and Commissioner for Justice, represented by Mrs. Titilayo Shitta-Bey, Permanent Secretary, stated members of the State Executive Council accepted the Government’s resolve to issue the bond at its meeting on December 20, 2021.

Mrs. Kemi Awodein, Managing Director of Chapel Hill Denham and a representative of the 24 issuing parties, called the bond a “landmark transaction” and the largest ever issued by a non-federal government agency.

She stated that all of the issuing parties were united in their support for the Lagos government in achieving its development goals, which the bond permitted.

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One Comment

  1. Yinka Adegbuyi

    December 20, 2021 at 9:13 pm

    With this development one hopes to see Lagos State edging closer to the “Mega City” status of her dreams. It is worthy of note that developments in the city requires funding and the advice is to the money managers to utilize the funds appropriately for the sole aim for which it has been raised.

    Failure for deviating from proper management and utilization of borrowed funds will only sink the state and it’s residents into a more parochial loss cum perpetual indebtedness

    Reply

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