There you have it folks, Benue state just completed the sale of its 14% FIXED INTEREST (yes fixed) Development Bond Issue which is expected to mature in 2016. The sale was fully underwritten by the Issuing Houses and as such the state will receive the money in full upfront.
Except for some reason my estimates are wrong for the next 5years, citizens of Benue state will pay interest of N1.82b every year to totaling N9.1b for the period. Basically the effective cost of holding the bond is 70% ( 9.1b/13b).
The Bond market like I have warned severally is been lynched by state governments. These guys are borrowing at exorbitant rates it’s difficult to see how they can be able to sustain these high cost going this setting the stage for a default in the not too distant future. If they avoid default, then expect the states to cut government expenditure I. Programs that will help the poor as is typically the case.