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Lagos gets SEC approval to issue N87.5bn bond

By on November 7, 2013

Lagos State Tuesday said it had obtained the approval of the Securities and Exchange Commission (SEC) to issue N87.5 billion 7-year bond to fund critical infrastructure projects.

The state’s Commissioner for Finance, Mr. Ayo Gbeleyi, who disclosed this in a statement, said the state government had “received clearance from the SEC to open a 7-year N87.5 billion bond, maturing in November 2020.”

But of the N87.5 billion, THISDAY learnt that the state government had earmarked a whopping N25.3 billion to buy back the Lekki Concession Company (LCC), the concessionaire of the Lekki-Epe Expressway.
The state government, according to THISDAY checks, had also earmarked a total of N15 billion as the buy-out cost of the LCC, N6.8 billion slated to service the existing debt and N3.5 billion as the third-party liability cost.

Apparently, the resort to source for the funds might be connected to what Governor Babatunde Fashola, last week, attributed to shortfall in the monthly receipts or payments due to the state governments from the Federation Accounts Allocation Committee (FAAC).

However, in the statement, Gbeleyi said the bond  was “consistent with the state’s policy thrust that focuses on poverty eradication and sustainable growth through infrastructure renewal and development.”

The commissioner explained the bond would contribute to the completion of ongoing infrastructure project to enhance the provision of social services aimed at improving the living standards of Lagos residents.

He listed the ongoing projects, which would benefit from the projects to include: “The Lagos-Badagry Expressway, the Blue Line Metro Rail, the Adiyan Water Works, Ayinke House (Mother and Childcare Centre), acquisition of the entire shareholding of the LCC and Shoreline Protection Works.”
He said the bond issuance was another milestone in the state’s drive towards its vision of ’making Lagos Africa’s model megacity and global economic and financial hub, that is safe, secure, functional and productive’

He said the bond was “rated A+ by Augusto & Co. and AA- by Global Credit Ratings. It is the second and final tranche of the state government’s N167.5 billion 2nd debt issuance programme, launched in November 2012.”

“The bond will be issued by a way of book building, opening next week to qualified investors including pension funds, banks, fund managers, insurance companies, other institutional investors and high net worth individuals, with Chapel Hill Denham as lead book runner,” he added.

Continuing, Gbeleyi also said: “Afrinvest, Radix Capital, FBN Capital, FCMB Capital Markets, Marina Securities, Skye Financial Services, Stanbic IBTC Capital, Vetiva Capital Management and Zenith Capital, are acting as joint book runners.”

 

[This Day]