Lagos retires N50bn first tranche bond coupon

N50 billion first tranche of the bond series issued by the Lagos State government has been retired. The five-year bond undertaken by the state in 2009 for infrastructural financing was fully redeemed in February this year, and this is believed to have further bolstered the confidence of the investing public in the state’s bond progarmme.

All of the series of the borrowings by the state under the bond programme which targeted to raise N275 billion in all, with a moratorium period of about twelve years had been oversubscribed in what analysts say represents growing confidence of investors in the state’s economy.

The bond series began in 2009 with the issuance of N50 billion in tranche 1 (which has matured and fully redeemed) and N57.5 billion in 2010 in tranche 2 of the same series expected to mature in 2017. Under series 2 of the bond issuance, the state in 2012 raised N80 billion in tranche 1, which is maturing in 2019, and eventually sealed the deal in 2013 when it raised N87.5 billion last tranche of the series 2. With N50 billion offset, the outstanding in the state bond programme is now N225 billion.

Ayo Gbeleyi, the state commissioner for finance, in a session with the media on Wednesday, said to ensure the continuing the repayment of the bond debts, the government had created a Consolidated Debt Service Account (CDSA) managed by independent trustees to which 15 percent of the state’s monthly internally generated revenue (IGR) is transferred. Lagos currently generates about N20 billion IGR monthly, and according to Gbeleyi, as at March 2014, the CDSA had accumulated N47.8 billion.