Dipo Olowookere
By Dipo Olowookere
The Lagos State government has said it would recall the N47 billion bond it issued to investors in December 2016 at an annual interest rate of 16.50 per cent.
The state government said it would pay-off the value of the 7-year notes in June 2021, when the next interest payment is expected.
In a statement, the Lagos State government explained that it was taking this decision to explore the current low yield environment in the fixed income market and then reduce the cost of debt servicing.
When the papers were sold to investors about five years ago, interest rates of fixed securities were above 15 per cent but at the moment, they are at single-digit.
The bonds are expected to mature in December 2023, but the government intends to redeem them now and then approach the debt market to raise another fund.
A few days ago, the state government said it retired two similar bonds it sold in August 2017 ahead of their maturities.
In the statement obtained by Business Post, the state government said it paid holders of the N46.37 billion bond issued at the rate of 16.75 per cent as well as the N6.91 billion bond issued at the rate of 15.60 per cent interest.
These notes were issued to investors under the N500 billion bond issuance series programme of the Lagos State government.
“It is pertinent to state that the Lagos State Executive Council passed the resolution to repay its series II bonds, while the call notice to bondholders was published on Tuesday, January 12, 2021, being 30 days prior to the date of the call exercise in line with the bond covenant,” the Permanent Secretary at the Lagos State Debt Management Office, Mr Olujimi Ige, was quoted as saying in the statement.
He further disclosed that the state has started the process of new bond issuance at a lower coupon to replace the called up bonds.
Recall that last November, the state government fully paid up the N87.5 billion bond (Programme 2 Series 2), issued on November 26, 2013, at a coupon rate of 13.5 per cent and a tenor of seven years.
