Infrastructure enhancement: Lagos raises N157billion from capital market
By Dele Ojo
The Lagos state government has further approached the capital market to raise some N157.3 billion to fund various critical infrastructure development needed for the state to continue its leadership footprint on the Nigerian landscape. To finalise the deal, Mr Babajide Sanwo-Olu, Lagos State Governor, Monday, signed the necessary documents required by the Securities & Exchange Commission (SEC) for the issuance of Lagos State’s N137.3b 13% ten- year debt instrument. The Governor, who was elated, explained that it became necessary to issue the bond in order to bridge the infrastructure deficit in the state and make life more comfortable for Lagosians.
According to him, Monday marked 930 out of 1,460 day of his administration, and that they will continue to count the days and set the bar for new heights and new levels. He said his government, over a year ago, issued a N100billion which was then the largest bond issuance by a sub nation, noting, “we have shown that in the capital market, we can stay in the kitchen and withstand the heat”.
To him, this was the third time a sub nation will issue such a large bond which is a testimony of investor’s confidence in Lagos State.
Giving reasons for making a recourse to the bond option, the governor said that having received his mandate, it became imperative to redeem his promises; therefore, he commenced the issuance process in 2020. According to him “we saw an opportunity and took advantage of the favourable market environment and with their financial advisors went to the market to issue the Bond”.
At the signing ceremony with the issue houses in attendance, Sanwo-Olu said the conclusion of the process will bring to N377.715b the total value of bond issued from the Lagos State 500b debt issuance programme, explaining that though the plan was to raise up to N125b but closed the book build with bids totalling N137.3b.
” This strong response from the investing community – to our administration’s debut bond issuance – is humbling and is indeed a testament to continued investor confidence in the State’s ability to deliver on its infrastructural and socio-economic developmental objectives; and to meet repayment obligations.”
Notwithstanding the significantly over-subscribed book, and active participation from a wide array of institutional investors – including banks, pension fund administrators, asset managers and corporates, Lagos State has maintained its discipline on size and pricing.
It is a major financial centre and as of 2013 would have been the fifth-largest economy in Africa if it were a country. Lagos State’s Gross Domestic Product (GDP) of $84 billion in 2021 compares with Ghana’s $67 billion, Rwanda’s $10.4 billion, and Kenya’s $95.5 billion.
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