Lagos State has set another record in accessing capital market funds to finance delivery of key infrastructure projects. Governor Babajide Sanwo-Olu, on Tuesday, May 23rd, 2023 presided over a ceremony where the State Government, issuing parties and trustees signed transaction instruments for first sets of allotment in the N1 trillion Debt and Hybrid Issuance Programme.
The State issued a 10-year tenure bond value at N115 billion at 15.25 per cent in its fourth issuance under the Debt and Hybrid Issuance Programme duly approved by the State House of Assembly.
The second instrument is a seven-year tenure bond valued at N19.815 billion at 14.675 per cent Fixed Return Forward-Ijarah Lease Sukuk billed to mature by 2030, which marked the first shariah compliant instrument to be issued by Lagos.
Attorney-General and Commissioner for Justice, Mr. Moyosore Onigbanjo, SAN, formally read out the resolutions of the State Executive Council adopting the issuance the two bonds before the signing of the instruments by the parties.
Sanwo-Olu described the development as “another significant milestone” recorded by his administration in delivering required infrastructure that would catalyse economic growth across the State. The two bond issuances, he said, would provide the impetus for his government to further drive its development agenda in critical sectors of the State.
He said: “As we renew our mandate in the coming days, these two issuances will provide the impetus for my administration to further drive our THEMES agenda. Proceeds from the Bond and Sukuk will enable various Ministries, Departments and Agencies, including the Ministry of Energy and Mineral Resources, Ministry of Agriculture, the Office of Drainage and Water Resources, Ministry of Works and Infrastructure, Ministry of Education, Ministry of Health, and Ministry of Waterfront and Infrastructure, to execute respective projects that have been pre-inspected by the Securities and Exchange Commission and issuing houses.”
“Some of the projects include massive overhaul of 33 public schools in Itolu area of Ajegunle and ongoing road infrastructure projects on the Lekki-Epe corridor. Significant part of the funds will be used for drainage works, sea and lagoon embarkment to protect environment from climate issues. In health, we are using part of the proceeds to kick off our Infectious Disease Research Centre at Infectious Diesease Hospital in Yaba, because of the experience we had with coronavirus. We are building agricultural capability to feed our people. Part of the proceeds is going to all the activation we have been doing around constructing major food markets.”
Sanwo-Olu said the proceeds from the issuances would not only drive infrastructure development, but also stimulate economic growth, foster job creation, and enhance the quality of life for the residents.
The Governor thanked investors’ community for believing in “tremendous opportunities” in Lagos, reiterating his commitment to discipline and transparency in the deployment of the funds.
Commissioner for Finance, Dr. Rabiu Olowo, said the Sanwo-Olu administration made stand-out financing decisions that would continue to enhance the State’s ability to deliver needed infrastructure.
Olowo said the issuances demonstrated Lagos’ status as a “Category A Issuer” and a proof of the trust that investors had in the State’s ability to judiciously deploy proceeds to deliver on the government’s projects.
He said: “The transaction reflects the resilience and depth of the domestic debt capital market, which Lagos has been able to rely on in our quest to build a Greater Lagos for generations to come. Aside democratic process, the validity of a government’s credibility is when discerning, shrewed business people, investors willingly put their money to support the development agenda of a State.”
A lead issuing house, Chapel Hill Denham, said Lagos raised the N134 billion bond within 14 days of issuance, saying the oversubscription was an indication of investors’ confidence in the State.
Its Managing Director, Mrs. Kemi Awodeyin, said the issuing house remained disciplined and committed to Lagos in its drive to improve economic growth.
Hajara Adeola of Lotus Financial Services, the lead issuing house which facilitated the Sukuk instrument, praised Lagos Government for building faith in non-interest finance.