Lagos raises N100bn infrastructure bond

The Lagos state government says it has raised a N100 billion series III bond under its N500 billion bond issuance programme.

Babajide Sanwo-Olu, the state governor, said the proceeds from the bond will be used to execute key infrastructure projects.

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 said that the bond offered through book-building recorded an oversubscription of 196.5%.

Book building 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 a private placement.

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.

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

“We will ensure that the entire Lagosians feel the impact of this investment, that they feel the direct intervention in their houses, on the roads, on the bridges we build, and the hospitals that we are going to build,” he said.

“We will ensure they feel it in the schools that we are going to renovate and build for their children, in the slums that we are going to renovate, such that the real essence of governance can be given to all of them.”

The Series III issuance was maintained at N100 billion and clearing price of 12.25%.

Chapel Hill Denham acted as the lead issuing house alongside 14 other issuing houses on the transaction.