Governor Babajide Sanwo-Olu on Monday made history as he signs N137.328 billion bond issuance by a sub nation.
The Governor, who was elated, explained that it became necessary to issue the bond in order to bridge the infrastructure deficit in the state and make life more comfortable for Lagosians.
According to the Governor, Monday marks 930 days out of 1,460 day of his administration, and that they will continue to count the days and set the bar for new heights and new levels. He said this same government over a year ago issued a N100billion which was then the largest bond issuance by a sub nation. He said “we have shown that in the capital market, we can stay in the kitchen and withstand the heat”.
He said this was the third time a sub nation will issue such a large bond which is a testimony of investor’s confidence in Lagos State.
He said that having received his mandate, it became imperative to redeem his promises, therefore, he commenced the issuance process in 2020. He said “we saw an opportunity and took advantage of the favourable market environment and with their financial advisors went to the market to issue the Bond”.
The Governor said they were able to get support from the financial market.
He said it took eight months down the line to issue N125billion but got N137.328billion. “This means there is something we’re doing right,” he said, adding that it is very “humbling and a testament to the confidence the investors have in us.”
He said the proceeds of the bond will be used to execute far reaching projects in line with vision to build a greater Lagos and make life better for its citizens.
He listed some of the projects for which the bonds will be utilized as 10 kilometer regional roads, construction of Ijedodo Road, Oba Sekumade Road, Ikorodu, Demurin Street in Kosofe, Lagos-Badagry Road amongst others. He also said part of the funds will be expended to address drainage issues and flooding issues while health promises will also be met.
He appreciated the various agencies such as Federal Ministry of Finance, Debt Management Office, Abuja, Pension Commission, Securities and Exchange Commission. He also appreciated the financial advisors, the Issuing Houses, Stockbrokers, the Investing Community, adding that he hopes the investing community will continue to trust in the state’s ability to issue credit worthy bonds.
He promised to continue to deliver on the mandate given by Lagosians.
In his welcome and keynote address, the Commissioner for Finance, Dr Rabiu Olowo, noted that the bond is the biggest Bond Issuance by any sub national entity. He said the respective documents to be signed as required by Securities and Exchange Commission is the high point of the bond issuance. He said the State Government took advantage of the favourable climate in the Capital Market to initiate a bridge to bond process in order to re-access the Capital Market to drive the T.H.E.M.E.S. Agenda.
The Commissioner said the state was able to achieve and exceed the target and appreciated Mr Governor for his quick intervention when there were challenges. He said they were able to exceed the N125bn subscription ending up with N137.328billion. According to him, it was a testament of continued investment trust adding that it shows credibility of Mr Governor. He said “we have broken a record and left a new record to beat”.
He acknowledged the role of the Capital Market and appreciated everyone for their contribution, The Issuing Houses, the Trustees, Solicitors, the Rating Agencies, the Stockbrokers, the Receiving Banks and support from other Agencies. He assured that the proceeds of the bond will be judiciously utilized.
In her remarks, the representative of Chapel Hill Denham Advisory Services, the lead Issuing House, Kemi Awodein congratulated Lagos State Government in achieving another milestone by raising the largest bond ever by a sub nation. She thanked Lagos State for their trust in them, adding that “we stand solidly behind you” and hope to do more.
The Series IV 10-Year 13.0% Bond due in 2031 under its third N500 Billion Debt Issuance Programme is the largest Bond Issuance in the debt capital markets by a non-sovereign issuer. This Issuance also marks the third 10-Year bond instruments by a sub national issuer-with the first and second being Lagos State, further extending the maturity profile of the State’s debt portfolio to match its investment in infrastructure which are long term assets.
The Book Build in respect of the Series IV offer commenced on November 19, 2021 and was completed on December 8, 2021. The offer was well received with strong participation from diverse range of investors including Pension Funds, Corporates, Fund managers, Financial Institutions, and high net worth individuals. At conclusion, the total value of represented 1.2 times oversubscription of the intended N125Billion issuance. The Issue was launched with the State exercising its green shoe option at clearing coupon of 13% with N137.3billion in qualified bids.
The Lagos State Series IV Bond Issuance further reinforces Lagos State’s status as “category A State” among the State Governments in Nigeria and is also a testament of investor’s confidence in the State’s ability to responsibly utilize Bond proceeds as well as deliver on its infrastructure and socio-economic developmental objectives. The transaction is also a strong reflection of the resilience and depth of the domestic debt capital market.
Lagos State government has a credit rating of A+ by Global Ratings Co. and Agusto & Co.
