The Lagos State Government on Monday signed the necessary documents required by the Security and Exchange Commission (SEC) to facilitate the issuance of N137.328 billion bond aimed at executing key infrastructure in critical sector of the economy in the state.
This follows the meeting of all statutory instruments that will facilitate the raising of the 13% fixed rate bond by the Lagos state government from the capital market.
Speaking at the occasion, the Lagos State Governor, Babajide Sanwo-Olu, who presided over the signing ceremony where the necessary documents were signed by the Lagos State Attorney General, issuing parties and trustees of the funds, said that the state set out to raise N125 billion from the capital market but closed the bids with N137.3 billion, following oversubscription.
The Governor said the development is a demonstration of 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 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.
What the Lagos State Governor is saying
Sanwo-Olu 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.
He said, “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 per cent 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 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% 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.
What the Lagos State Commissioner for Finance is saying
The Lagos State Commissioner for Finance, Dr. Rabiu Olowo, while giving the summary of the bid book in respect to the bond, said 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% 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
“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 Lagos State Attorney-General and Commissioner for Justice, Mr. Moyosore Onigbanjo, SAN, was represented at the occasion by the Permanent Secretary of the ministry, Mrs. Titilayo Shitta-Bey.
What you should know
Recall that earlier in November 2021, the Lagos State Government revealed plans to raise N125 billion bond from the capital market under the state’s N500 billion Bond Issuance Programme to execute some projects in the state.
The bond which is the largest bond issuance in the domestic capital market by a sub-national government would be targeted to fund infrastructure and pressing capital projects.
The state government had also earlier raised N100 billion from the debt market with the issuance of 10-year notes at 12.25%.