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States raised N791.2bn bonds in 40 years

By on September 5, 2017

States in the federation have raised N791.2 billion through issuance of bonds in 40 years to carry out infrastructural development projects or service loans.

A bond is a debt investment in which an investor loans money to an entity, typically corporate or governmental, which borrows the funds for a defined period of time at a variable or fixed interest rate.

According to data obtained from the Securities and Exchange Commission (SEC), then Bendel State was the first to secure N20 million on behalf of Bendel State Loan Stock in 1978 for housing estate development. The bond matured in 1988 at 7 per cent coupon rate.

Ogun State Revenue Bond took a N15 billion, 10-year bond in 1986 for the development of water project, followed by Lagos State Revenue in 1987 which issued a N30 billion bond for the development of Lekki Peninsula Scheme Phase I. The first Oyo State Revenue Bond of N30 billion for Adamasingba Shopping Complex, Gbagi Market Development was a 12 year bond.

So far, Lagos State is leading other states in the country with a total of N290.090 billion bond issuance, the highest was N87.5 billion government Bond – Series 2 under the N167.5 billion debt issuance programme of 2013 for maturity in 2020.

The bond raised which was issued at 13.5 coupon rate, was meant for infrastructure developments (roads, rail, buildings and bridges etc), health facilities, construction of Adiyan Water Project Phase II  and shoreline protection works.

Lagos had in 2012 issued a N80 billion bond under the Series 1 of the N167.5 billion debt issuance programme at 14.5 per cent coupon rate for construction of Adiyan Waterworks (Phase II), infrastructure developments (roads, rail, buildings and bridges etc), health facilities and redevelopment of Eric Moore Schools (Phase I).

Two states, Bayelsa and Delta, followed Lagos closely with the issuance of N50 billion bonds. Bayelsa raised a 7-year N50 billion bond this year at 13.75 per cent rate. The fund is meant for repayment of existing obligations owed Equatorial Bank, Bank PHB, Intercontinental Bank, First Bank of Nigeria, Multilateral Debts and the World Bank while that of Delta State Government which was issued under the N100 billion debt Issuance Programme in 2011 was for financing of developmental projects.

Osun State Government, under a N60 billion debt issuance programme, in 2012 raised N30 billion bonds at 14.75  rate for road infrastructures, commercial infrastructure (O-Hub, Dagbolu, Osun), urban renewal (Ilesa, Ikire, Osogbo, Ede and Iwo), Ede waterworks and refinancing of loan.

Edo State Government’s N25 billion is refinancing total debt obligations and on-going infrastructural projects. The bond was issued in 2010 to mature in 2017 at 14 per cent rate.

Kwara State issued N17 billion bonds in 2009 Series 1 N30 billion debt issuance programme for truck plaza, International Aviation College, Asa Dam mixed use Development, new secretariat, commercial agricultural projects, Kwara State University, Ilorin water distribution project, agricultural irrigation support project and Kwara advanced diagnostic centre, Loan re-financing.

Other states are Ondo which under the N50 billion debt issuance programme, subscribed to N27 billion bonds at 15.50 per cent rate, the highest rate in 39 years to finance developmental projects and Ekiti State’s N20 billion in 2011 to mature in 2018 for financing developmental projects. Ebonyi State had N16.500 billion,

Gombe leads other states in the North with a N20 billion bond it issued in 2012 to mature in 2019 at 15.50 per cent for building of township and regional roads; College of Education Billiri, School of Basic and Remedial Studies Kumo; development of secondary schools, purchase of earth moving equipment, Mega Park, School of Nursing and refinancing of existing loan.

Kaduna State Government under the N15 billion debt issuance programme issued N8.500 billion in 2010 at 12.50% to finance Zaria regional water supply (150 MLD treatment plant), construction of 200 bed specialist hospital, Kaduna Millennium City, construction of new government house office complex, construction of Tum-Madakiya road and construction of 4th bridge across River Kaduna as well as construction of Kafanchan campus of Kaduna State University.

Niger State had N12 billion under the N21 Billion Medium Term Note Programme. It was issued in 2013 for infrastructure development.

Bauchi State has N15 billion issued in 2014 and maturing in 2021 at 15.50 per cent for part financing of the state’s specialist hospital, completion of Sir Abubakar Tafawa Balewa International Airport and refinancing of bank loan.

Other states that participated in the band market are; Yobe N2.5billion in 2000 matured in 2006, Cross River state, N4billion in 2004, matured in 2007, Akwa Ibom state, N6billion in 2004 matured in 2007, Kebbi N3.5 billion in 2006 matured in 2009, Imo state N18 billion in 2009 matured in 2016, Bayelsa N50 billion in 2010 matured in 2017, Benue N13 billion in 2011 matured in 2016 and Kogi N5 billion In 2013 matured in 2020.

 

[Daily Trust]