Lagos raises N100 billion bond to finance infrastructure

Photo provided by Asoko Insight

Sanwo-Olu: ‘It’s a new journey toward developing Lagos’

Lagos State Government has opened a new chapter in its stride towards attaining self-sustenance in finance and governance. Governor Babajide Sanwo-Olu on Wednesday, signed documents for the issuance of N100.33 billion bond, which the State raised from capital market to fund infrastructure and pressing capital projects.

At a signing ceremony held at the Banquet Hall at the State House in Alausa, Governor Sanwo-Olu, investors and issuing parties put the final ink on the over-subscribed Series Three Bond Issuance of N100 billion, which was issued and raised by the State under its N500 billion Third Bond Programme approved four years ago.

The Governor, who was visibly excited by the financial intervention, declared the moment as “historic and new journey” for the State in its drive to provide requisite infrastructure to catalyse its economy, saying it was the largest bond programme ever embarked on by any sub-national entity in the country.

Sanwo-Olu said: “We have embarked on a new journey that is not meant to serve our personal interest, but to activate more prosperity for our dear Lagos and give our people the hope for better tomorrow we all dreamed. When we came into Government, we made commitment to all Lagosians that we are coming to pursue and implement an agenda that will build our capacity to achieve ‘Greater Lagos’ we all will be proud of.

“Today, I am standing in from you all to say we are writing the financial history of Lagos in another chapter and it will bring good dividends to all residents. With this N100 billion bond, we will ensure that all Lagosians feel the direct impact of this intervention in their homes and on the roads. We are bringing new infrastructure and repairing the existing ones, including bridges and hospitals. We are going to renovate schools and build new ones for our children; slums will be regenerated and pressing environmental issues will be solves. We are going to make people feel the essence of governance.”

Sanwo-Olu recalled that the effort to raise the bond started some three months ago with a simple discussion with professional partners led by Chapel Hill Denham. He observed that the State almost missed the opportunity, as the statutory period recommended by Securities and Exchange Commission (SEC) to raise such bond was closing when the State started pushing for the bond issuance.

The Governor said the partners staked their time and energy for the State to secure essential requirements to access the capital for the bond. Within a period of three months, Sanwo-Olu said the partners helped Lagos to restructure its balance sheet and reduce the State’s interest expense by N17 billion, which gave Lagos the opportunity to raise the bond from the capital market.

“Less than three months down the line, we are celebrating the biggest sub-national bond issuance today and the team of partners has also helped us to restructure our entire balance sheet. We have been able to revert the entire borrowing of Lagos from very high rate to acceptable numbers. The team has also helped us to reduce interest expense by N17 billion, which made it easy for us to approach the financial market.”

Sanwo-Olu promised not to betray the confidence of investors that subscribed to the bond, pledging that the funds would be disbursed strictly to finance infrastructural projects required to boost the State’s economy.

Commissioner for Finance, Dr. Rabiu Olowo, said the State accelerated the bond programme in response to the need to close “huge infrastructural gap” in the face of limited financial resources available to the State. He said the State Government took the advantage of favourbale investment climate in the capital market to issue the “Series Three” of its bond programme to raise the money.

“The cost of inaction would have been huge and it would mean over 20 million Lagosians would be underserved in many areas. It was, therefore, with this mandate that Lagos Government sought the support of professional advisers to access the capital market in December 2019.

“It is fulfilling to note that, despite hurdles we faced, we have been able to achieve the target we set for ourselves. In fact, we exceeded the target. I want to assure all residents that the proceeds from this bond issuance programme will be judiciously utilised in line with our T.H.E.M.E.S agenda to achieve a ‘Greater Lagos’.”

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