R-L: Lagos State Governor, Mr Babajide Sanwo-Olu; Commissioner for Finance, Dr. Rabiu Olowo and Lagos State Attorney General and Commissioner for Justice, Mr Moyo Onigbanjo (SAN) during the signing of the Lagos State N100 Billion Series III Bond Programme at Lagos House, Alausa, Ikeja, on Wednesday, Jan. 29, 2020
By Florence Onuegbu
Lagos – The Lagos State Government on Wednesday announced the issuance of N100 billion Series III Bond under its N500 billion bond issuance programme.
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.
Book building is a process of price discovery. It is a process by which the issuer company, before 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 book building process, the issuing company is required to tie up the issue amount by way of private placement.
The issue price is not priced in advance. It is determined by offer of potential investors about price which they may be willing to pay for the issue. To tie-up the issue amount, the company organizes road shows 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.
Sanwo-Olu said that the issuance of the bond was toward ensuring a ”Greater Lagos”, as promised to over 22 million Lagosians.
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.
”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.
”We really are appreciative of the investing community, whose sustained support of Lagos State continues to spur our resolve to deliver an a Greater Lagos.
”Our achievement of a very solid outing in terms of the tenor, size and pricing of the Bond positions Lagos State as very active participant in the development of our domestic debt capital markets.
”We remain resolute to upholding our commitment to being the most responsible Issuer in the Nigerian capital markets,” the governor said.
The Commissioner for Finance, Dr Rabiu Olowo, said that the N100 billion bond was the largest bond issuance in the domestic capital markets by a sub-national government.
Olowo said the issuance is only the second time a 10-year instrument has been issued by a non-sovereign issuer. Lagos State issued the first 10-year Bond in 2017.
He said that Lagos State maintained its discipline on size and pricing, despite the over-subscribed book and the active participation from a wide array of institutional Investors, including banks, pension fund administrators, asset managers and corporates.
The Series III issuance was maintained at N100 Billion and clearing price of 12.25 per cent.
”We acknowledge the unwavering support of investors to the significant growth witnessed by Lagos State; given that the monies raised through our Bonds are being committed to the development of physical and social infrastructure, for the benefit of us all.
”Our partners, especially the issuing houses led by Chapel Hill Denham, have worked tirelessly with us to deliver another successful outcome on this landmark transaction.
”We also acknowledge the support received in the issuance process from the Federal Ministry of Finance, the Securities & Exchange Commission and Debt Management Office Nigeria,” the commissioner said.
Chapel Hill Denham acted as the Lead issuing House/Bookrunner. There were 14 other issuing Houses on the transaction.