Lagos govt issues N100bn bond for infrastructure development

The Lagos State government on Wednesday announced the issuance of N100 billion Series III Bond under its N500 billion bond issuance programme.

Speaking at the signing of the bond in Ikeja, Lagos State governor, Babajide Sanwo-Olu, said that the bond would be applied to execute key infrastructure projects in the state.

Sanwo-Olu said that the signing was Lagos State’s third Bond Programme; as the state had previously issued bonds under N107.5 billion and N167.5 billion programmes.

He noted that the bond offered through book-building recorded an oversubscription of 196.5 per cent.

Book building is a process of price discovery. It is a process by which the issuer company, before the filing of the prospectus, builds-up and ascertains the demand for the securities being issued and assesses the price at which such securities may be issued, and ultimately determines the quantum of securities to be issued.

Under the book-building process, the issuing company is required to tie up the issue amount by way of private placement.a

The issue price is not priced in advance. It is determined by an offer of potential investors about the price which they may be willing to pay for the issue. To tie-up the issue amount, the company organizes roadshows and various advertisement campaigns.

According to the governor, this strong response to the new administration’s debut bond issuance is a testament to continued investor confidence in Lagos State and its strong credit profile.

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Sanwo-Olu said that the issuance of the bond was toward ensuring a ”Greater Lagos”, as promised to over 22 million Lagosians.

He thanked the investors for the confidence they had in the government of the state and assured that the fund would be judiciously utilised.

The Commissioner for Finance, Dr Rabiu Olowo, said that the N100 billion bond was the largest bond issuance in the domestic capital markets by a sub-national government.

Olowo said the issuance is only the second time a 10-year instrument has been issued by a non-sovereign issuer. Lagos State issued the first 10-year Bond in 2017.

He said that Lagos State maintained its discipline on size and pricing, despite the over-subscribed book and the active participation from a wide array of institutional investors, including banks, pension fund administrators, asset managers and corporates.

The Series III issuance was maintained at N100 Billion and clearing price of 12.25 per cent.

Chapel Hill Denham acted as the Lead Issuing House/Bookrunner. There were 14 other issuing Houses on the transaction.