Lagos courts investors for largest ever subnational bond

The Lagos State Government is set to issue a new series of bonds to fund infrastructure development and promote environmental sustainability, according to Abayomi Oluyomi, the Commissioner of Finance.

The total bond issuance is N214.8 billion, which are in two categories; a N200 billion, ten-year bonds targeted at 24 infrastructure projects across nine ministries, departments, and agencies (MDAs). These MDAs cut across housing, health, environment, agriculture, transportation, and innovation, science & technology.

The second is a N14.815 billion green bond—the first of its kind by a sub-national government in Nigeria. The proceeds from the green bond will be channeled into environmentally sustainable initiatives such as renewable energy, climate change adaptation, and sustainable water and wastewater management.

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“Lagos is first among peoples, among the sub nationals, not only in this country, but on this continent, that we feel confident pushing the envelope and asking the investing markets to work with us to raise 200 billion naira of capital,” Bolaji Balogun, CEO of ChapelHill Denham said.

Over the last 17 years, Lagos has issued in dollar equivalent more than $3.1 billion of bonds in Nigeria’s capital markets.

Balogun said that the bonds will be launched next week, and will be open for approximately five days.

“We hope to price these instruments and to deliver proceeds to Lagos state within about 15 to 20 days from today,” he said.

The state has maintained a debt-service-to-revenue ratio of 19.2 percent, earning it a local credit rating of A1+ and a reaffirmed AAA rating from Fitch Ratings. He attributed these strong ratings to the DMO’s excellent performance.

Babajide Sanwolu, governor of Lagos state said that the green bond is a way to demonstrate to the international community its ready for ESG investment.
“For us it’s also a call to demonstrate to the international market, especially COP, that we are serious people. If I have this green bond, I will now go international to say that by local market, has able to do this,” the governor said.