State and Local Govts | |
State and Local Govts | |
1138 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Monday, September 28, 2020 / 10:20 AM /By
FBNQuest Research / Header Image Credit: FBNQuest
The
total indebtedness of state governments at end-June amounted to US$15.09bn,
equivalent to 10.5% of GDP. (We have converted the larger, naira element at the
fx rate at the I&E window.) The domestic/external mix was 72/28 at
end-June. The external borrowing was unchanged over 12 months because it is all
guaranteed by the FGN, which has become concerned about the repayment capacity
of most states. The domestic borrowing increased by just 5.6% over the same
period, and is subject to tighter regulation by public agencies including the
DMO and the Securities and Exchange Commission.
The five largest debtors at end-June were Lagos, three oil-producing
states and Kaduna, which has a reforming administration and a governor highly
regarded by Nigeria's official creditors. After Lagos, Kaduna has by far the
highest external debt among states.
The average indebtedness of the remaining 31 states and the Federal
Capital Territory at end-June was US$303m. The least indebted was Yobe
(US$101m).
As with external borrowings, Lagos State is the largest domestic debtor
in terms of bank borrowings and bond issuance (see below). Its accounts for
2019 tell us that it is well placed to meet its obligations. We see total
revenue of N645bn, in which internally generated revenue (N348bn) comfortably
exceeded statutory allocations from the Federation Account Allocation Committee
(FAAC) of N230bn. It managed to post an overall surplus of N67bn after capital
items, depreciation and public debt service (N63bn).
Total debt
stock of state, Jun 2020 (% shares) |
|
Sources:
Debt Management Office (DMO) FBNQuest Capital Research |
This data series excludes the issuance of naira-denominated bonds, which
currently amount to N378bn in total. Lagos alone accounts for N328bn and is the
last state government to have come to the market (several times) since Cross
River in May 2015. Coupon and principal repayments are deducted from the
monthly distributions by the FAAC.
Related News
Related News - State and Local Govts