Delta State Completes 1st Tranche of 100 Billion Naira Bond Issuance program

The Delta State Government has successfully launched a first tranche of N 50 Billion out of its N 100 Billion Bond Issuance Program. The bond offer for subscription which opened up on September 30 2011 was fully subscribed. The Bond carries a Fixed Rate coupon of 14% and falls due in 2018. It is rated A+ by Agusto & Co and Global Rating Co Ltd.

The leading issuing house, Access Bank and other co-issuing houses including Bgl Limited and Vetiva Capital Limited attended a completion board meeting in Abuja over the Independence holiday weekend. Other attendees included the state Governor, Dr. Emmanuel Uduaghan, the Commissioner of Finance, Mr. Bernard Okumagba, and the State Attorney General, Mr Charles Ajuya amongst other senior-level government personnel.

The Governor of Delta state, Dr. Uduaghan has expressed his satisfaction at the successful first outing of the State into the Bond markets, and is determined to apply the proceeds of the Issue to develop much needed infrastructure for the people of Delta State. Proceeds of the Bond will be applied to infrastructure projects cutting across various sectors including an Industrial and Business Park, Hospital rehabilitation, Roads construction and Education.

Analysts attribute investor confidence in State Bond Issues to the fact that all such Bonds are guaranteed by the Federal Government of Nigeria, as there is a legal document called an ISPO (Irrevocable Standing Payment Order) issued by the Federal Ministry of Finance instructing the Accountant General of the Federation to deduct at source the amount required to meet the principal and interest obligations of the Bond.

In addition, the lackluster performance of the stock market is driving investors towards the Bond market for safer, and steadier returns on their investment.