Three weeks after it was announced, the Lagos State Government is finding it difficult to convince investors to subscribe to its Series IV Bonds of up to N125 billion designed to help fix roads in the states.
The struggle to meet the target has seen the date for the closing of the offer scheduled for Friday, December 3rd. postponed at least two times.
In fact, Lagos state increased the yields to entice investors, the bond offering could still not get up to N100 billion in bids from potential investors.
According to findings, Pension funds, the number one source for liquidity in the bond market, are dragging their feet to invest as they want the state to sort out issues with its Pencom compliance certificate.
It was gathered that the compliance certificate Lagos state has been using is almost three years ago and a source noted that it must have expired but that efforts are being made to rectify it.
The source also noted that a move during the weekend by Governor Babajide Sanwo-Olu to reel out the state’s commitment to workers’ pension could be connected to the bond issuance.
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Sanwo-Olu on Saturday revealed that since he came to power, 8,707 retirees are enjoying their retirement benefits under the Contributory Pension Scheme (CPS).
Speaking through Mrs Ajibola Ponnle, Commissioner For Establishment, Training and Pension, the Governor said: “The sum of N34,124,218,387.60 into the Retirement Savings Account (RSA) of Retirees in the Mainstream, Local Government, State Universal Basic Board (SUBEB), the Teaching Service Commission (TESCOM) and other Parastatals of the state government.
“We have also paid over N1.5 billion into the Retirement Savings Accounts (RSA) of 421 Retirees with their Pension Fund Administrators (PFAs) in addition to their monthly contribution for the month of November,” he added.
Lagos state bond offer first opened on Friday, November 19, 2021 as a 10 years fixed rate Senior unsecured note with minimum subscription of N10 million, and multiples of N5 million thereafter.
According to the state government, proceeds of the bond Issuance will enable it further accelerate the development of physical and social infrastructure in the state in line with the State’s THEMES Agenda.
THEMES is the acronym for Traffic Management and Transportation, Health and Environment, Education and Technology.
The bond is mainly targeted to 7 out of the 20 Local Government Areas (LGAs) for now.
Eti Osa LGA got the lion share of the bond proceeds with 5 road projects worth a total of N27.371 billion, this was followed by Kosofe LGA with 4 road projects worth N4.586 billion, Alimosho LGA with 1 project worth N2.703 billion.
Others are Ikorodu LGA with 2 road projects worth N2.245 billion, Ikeja LGA with 1 road project worth N1.479 billion, Ajeromi Ifelodun LGA with 1 project worth N1.160 billion and Lagos Mainland LGA with 1 project worth N632.6 million.
A further N82 billion from the bond proceeds will be used by the Lagos State Government to re-finance various bridge loans/facilities that have been obtained from respective Nigerian banking and financial institutions.