The Nigerian Stock Exchange (NSE) has ratified previous approvals-in-principle granted for the issuance of N15 billion bonds by three state governments. The ratifications were for N5b bond issue each by Kogi, Nasarawa and Ekiti states.
According to the approvals, Nasarawa State received ratification or a N5 billion 15 per cent Fixed Rate Bonds Series 1 Due 2021 under its N20 Billion Medium Term Note (MTN) programme.
Kogi State also secured approval for its N5 billion 15 per cent Fixed Rate Bonds Series 1 due 2020 under the government’s N20 Billion bonds issuance programme.
Ekiti State received final approval for its N5 billion 14.5 per cent Fixed Rate Bonds Series II due 2020 under the state’s N25 Billion bonds issuance programme.
The final ratification by the quotation committee of the NSE will enable the bonds to be listed for trade on the NSE.
Ekiti State Government had, on the basis of the approval-in-principle, raised N5 billion from the capital market to finance five major projects as the government seeks to complete major developmental projects that would impact on the socio-economic and urban-rural integration.
The N5 billion bond was the second and final tranche of the state’s N25 billion bond issuance programme. The new bond issue carries a fixed coupon of 14.5 per cent and will be due for redemption in 2020. However, coupon payment will be done twice a year while the government has made irrevocable commitment, which enables monthly deduction from its federal allocation. Ekiti State had raised N20 billion under the first tranche of the N25 billion issuance programme.
The net proceeds of the N5 billion bond issue, estimated at N4.80 billion, will be used to complete five major projects which are currently being financed by contractors under a contractor finance agreement. These projects include construction of the multi-purpose 10,000-capacity Ekiti-Kete pavilion, rehabilitation of Ire Burnt Bricks Limited, construction of River Ero bridge, construction of Ilawe-Igbaraodo-Iboji road and Ikole-Ijesa Isu-Iluomoba road.
According to the estimates for the uses of the net proceeds, N1.58 billion would be spent on the multi-purpose pavilion, about N966.9 billion would be spent on the Ire Burnt Bricks Limited while N220.36 million, N894.7 million and N1.14 billion would be spent on the bridge and the two roads respectively.
Governor of Ekiti State, Dr. Kayode Fayemi, said the approval and success of the second tranche of the bond programme reflected the market’s confidence in the state as evidenced in the judicious use of the proceeds of the previous issuance.
According to him, the state had committed the proceeds of its first tranche to several laudable projects that continue to bear testimonies to efficient use of funds including the Ikogosi Warm Spring, school of agriculture and roads across the state.
He pointed out that all the new projects identified under the new bond issue would have immense positive impact on the development of the state adding that all the projects would have been completed within the next one year.
He noted that while his administration was desirous of fast-tracking the pace of development through additional funds from the capital market, it is committed to efficient debt management as N9.2 billion has already been paid from the initial N20 billion issue.
