Fitch Ratings, an Internationally renowned rating agency, has, in its recent publication outlining the standing of the state, upgraded Lagos State ratings from AA+ (nga) to AAA(nga) for its good standing in terms of its debt sustainability, and resilience.
FitchRatings made this known to the State Commissioner for Finance, Dr Rabiu Olowo, saying the feat was published in the Y2020/2021 rating report, even as it noted that the upgrade of the National Long-Term rating reflected Lagos State’s strength compared with national peers as well as its resilient operating performance during the pandemic.
Senior Director, Head Sub-Saharan Africa, Mr Andrew Parkinson, in a signed congratulatory message, described the feat as a fantastic achievement and an endorsement of all the good work going on in the state.
“I just wanted to say congratulations on the upgrade to AAA (nga). This is a fantastic achievement and an endorsement of all the good work going on in your department,” he said.
According to him, the current rating underpins the state’s capacity to service its financial obligations owing to its stronger operating performance driven by IGR, which makes Lagos an outliner in the national context.
“The assessment reflects Fitch’s view of risk relative to international peers with the ability to recover debt service with the operating balance,” he said.
Fitch noted that Lagos benefits from a solid revenue structure driven by Internally Generated Revenue (IGR), which represents 70 per cent of its N620billion operating revenue at the end of Y2020.
The company, while maintaining that Lagos had embarked on a number of finance cost savings initiatives over the years, through restructuring of local borrowings to reduce overall debt service obligations, pointed out that in November 2020, the state fully retired its N87.5billion Bond and also conducted an early redemption of its programme 3 series II (tranches I &III) as well as series 1 bond in February 2021 and June 2021 respectively.
Recall that the state opted to call the Bonds in order to take advantage of the low yield environment (general low-interest rate) in the money and debt market while making significant savings in the overall cost of debt service. It has started the process of new bond issuance at a lower coupon to replace the recalled bond and is poised to effectively increase its financial performance each year.
Lagos State’s reputation as a responsible Issuer and player in the Nigerian Capital Market is not in doubt and this can be testified in its ratings rationally and Internationally.
Besides, the state government had successfully restructured all existing loan facilities and brought about a reduction in interest rates from an average of 18per cent to 12per cent, and delivered huge savings on the state’s debt servicing cost thereby easing cash flow.
As further testimony to the credibility of Lagos State, the N100billionn bond that was issued in January 2020 was listed early this year on the FMDQ Exchange, NG Exchange. This has also given greater visibility to the state, ensured transparency as well as increased the Bond Holders confidence.
YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE
Fitch upgrades Lagos ratings to AAA
We Have Not Had Water Supply In Months ― Abeokuta Residents
In spite of the huge investment in the water sector by the government and international organisations, water scarcity has grown to become a perennial nightmare for residents of Abeokuta, the Ogun State capital. This report x-rays the lives and experiences of residents in getting clean, potable and affordable water amidst the surge of COVID-19 cases in the state… Fitch upgrades Lagos ratings to AAA
and then