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Thursday, January 30,
2020 / 02:57 PM / by Kehinde Olatunji of The Guardian / Header
Image Credit: Twitter, @followlasg
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'."
Managing Director, Chapel Hill Denham, Mr. Bolaji
Balogun, described the bond as a "jumbo" for the State, stressing that the
support given to Lagos Government by the capital market was unprecedented.
Balogun noted that Lagos issued a bond of N100
billion, adding that the Minister for Finance granted the approval for the
process while in transit.Lagos, he said, must accelerate investment in
infrastructure, adding that such would create an incredible multiplier effect
on economic activities and give the State financial buoyancy. Sustained
investment in infrastructure, Balogun said, remained the only way to achieve
irreversible development and lift millions of people out of poverty.
A total of 315 bids were submitted during the offer
period for the Lagos Series Three Bond Issuance, putting the value of the total
bids at N196.48 billion. A total of 208 bids, which amounts to N100.33,
qualified under the terms of the offer at the clearing price of 12.25 per cent
per annum.
Credit:
The
post Lagos Raises N100bn Bond to
Finance Infrastructure first appeared in The Guardian on January 30, 2020
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