- Sanwo-Olu: It’s a new journey towards development
The Lagos State Governor, Mr. Babajide Sanwo-Olu, yesterday signed documents for the release of N100.33 billion, which the state government raised from the capital market to fund infrastructure and pressing capital projects, thus opening a new chapter in the state’s stride towards attaining self-sustenance in finance and governance.
At a signing ceremony held at the State House in Alausa, 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 government under its N500 billion Third Debt Issuance Programme approved four years ago.
The visibly excited governor declared the moment as “historic and new journey” for the state in its drive to provide requisite infrastructure to catalyse its economy, saying it is the largest bond programme ever embarked on by any sub-national entity in the country.
He 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 front of you all to say we are writing the financial history of Lagos in another chapter today 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 we are going to solve. We are going to make people feel the essence of governance.”
Sanwo-Olu said the effort to raise the bond started three months ago with a simple discussion with professional partners led by Chapel Hill Denham.
He added that the state almost missed the opportunity as the statutory period recommended by Security and Exchange Commission (SEC) to raise such bond was about 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.
According to him, within a period of three months, the partners helped the state government to restructure its balance sheet and reduced the state’s interest expense by N17 billion, which gave the state 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 a 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 stated.
He 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.
The state 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 added that the state government took advantage of favourable investment climate in the capital market to issue the “Series Three” of its bond programme to raise the money.
He said: “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 the 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 package for the state, stressing that the support given to the Lagos State Government by the capital market was unprecedented.
Balogun noted that it was rare for the sovereign to issue more than a N70 billion at any maturity for a sub-national entity.
He said Lagos got a bond of N100 billion at first maturity, adding that the Minister of Finance granted the approval for the process while in transit.
Lagos State, he said, must accelerate investment into infrastructure, adding that such would create an incredible multiplier 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.