23rd November, 2012
The Lagos State Government has signed financial deal to raise N80 billion through Bond with Chapel Hill Limited as lead book runner and Issuing House.
The sum represents the first tranche of the N167.5 billion the state is sourcing under its second bond series between now and 2019 while it is also the fourth time the state is raising funds through bond issuance to drive its infrastructure development.
According to Governor Babatunde Fashola at the completion of the board meeting at the Lagos House, Ikeja on Thursday, the money is to be invested in infrastructure development which remains the thrust of his administration.
The bond will be used to complete ongoing projects such as expansion and reconstruction of the Lagos-Badagry Expressway, Blue line rail corridor, ferry terminals in parts of the state to boost water transportation, construction and completion of health institutions such as Ayinke House within the Lagos State University Teaching Hospital (LASUTH) and Maternal Healthcare Centres among others.
At the meeting, which attracted participating financial houses and stock broking firms, Fashola assured that the money would be used for specific projects that would add value to the state’s economy.
“When my administration came out the first time to issue bond, it did so stating clearly its focus on infrastructure development, the faith of which it has kept,” he said.
The governor stated that Nigeria left behind 40 years of infrastructure decay, an unfortunate development, which he said, must be tackled in order to give the future.
Fashola said the bond would run beyond his administration, saying that “if my tenure is making progress towards the end, my responsibilities to the people have not stopped. So I have to borrow to do what I should do. What I can do with N10 today, my successor cannot do it with that same N10 tomorrow.”
“So, what we have done now instead of going to the banks to borrow at the high interest rate, we have gone to the larger public through public issuance of the debt bond to raise money and that includes bank but they are borrowing on a different parameters which is longer tenure with slightly lower interest rate.
“Also, the people who have money are looking for projects and investment to put their money into. The traditional place they used to put it is buying shares or companies buying land. So, in a sense, this is like a share that we have issued, so it creates a larger diversity of income yielding assets in which individual private members of the society can put money.”
—Kazeem Ugbodaga