Lagos State Government on Wednesday floated the last tranche of the N275 billion debt issuance bond to the tune of N 87.5 billion at 13.5 percent fixed rate, redeemable in by the year 2020.
Speaking at the completion board meeting, Lagos State Governor, Mr. Babatunde Fashola described the offer as the largest issue by any government, adding that the offer rounds off the N275 billion offer which has been issued in tranches since 2008 in the following order, N50 billion(first tranche), N57.5 billion(second tranche), N87 billion(third tranche) and finally N87.5 billion.
He said the product represents a process in public financing and debt management to bring about structured development of Lagos State. The governor noted that budget remains very key in driving economic development and that the Lagos State Government had maintained a record of steady budgetary performance from the first to the first to the last quarter.
The governor explained that for the first time in many years, his government recorded a drop in performance by one percent in the second quarter unlike the previous year when it recorded 89 percent. Fashola attributed the development to issues relating to public finance accounting. He however promised to do all he can to ensure that the state records better performance by the close of the third quarter.
Fashola said the 87. 5 billion will be deplored to infrastructural development like the ongoing work on 61 kilometres 10 lanes Lagos-Badagry Expressway, the Blue Line Metro Rail, the Adiyan Water works, Ayinke House (Mother and Childcare Centre) and acquisition of the entire shareholding of the Lekki Concession Company(LCC) and Shoreline Protection of the Lagos Bar beach to protect residents of the state from coastal erosion.
The governor attributed the success of his government in the area of infrastructural development to willing tax payers, whom he described as champions of development. He called on others to embrace tax payment as a way of life.
Turning to his critics, whom he described as voodoo economists, the governor explained that N94.6 billion has been set aside in a consolidated account to pay off all those who participated in the second tranche, adding that those who criticise his government for raising funds through bonds have failed to take note of what his government has achieved with the money in terms of infrastructural development.
He noted that the United State which is one of the most developed countries in the world, has a debt profile of $17 trillion, which he said has been ploughed into health care , schools and airports. He alluded to massive infrastructural development in Dubai, United Arab Emirate, stressing that the wonders in Dubai were achieved through a deliberate policy of debt management.
Fashola explained that the fact that investors are interested in a government that is just about 18 months to go was indicative of the trust they have in a performing governor.
The first tranche of the Lagos bond was over-subscribed by 249 percent. The second tranche was also oversubscribed. Issuing houses include Afrinvest, Radix Capital, FBN Capital, FCMB Capital Markets, Marina Securities, Skye Financial Services, Stanbic IBTC Capital, Vetiva Capital Management and Zenith Capital and Chapel Hill.