Lagos State Secures AA-(NG) Rating on ₦230 Billion Bond Issue to Boost Infrastructure
Lagos State has successfully secured an AA-(NG) national scale rating with a stable outlook from Global Credit Rating (GCR) for its ₦230 billion Series 4 Senior Unsecured Fixed Rate Bonds. The issuance forms part of the state’s ambitious ₦1 trillion debt programme, reflecting Lagos’s strong fiscal discipline and its continued influence in Nigeria’s subnational capital market.
The bonds, carrying a 16.25% interest rate and maturing in November 2035, are direct, unconditional, and unsubordinated obligations of Lagos State. They rank pari-passu with existing bonds under the programme. Analysts note that the rating aligns with the issuer’s senior unsecured rating, as there is no additional credit enhancement attached to the inflows designated for debt servicing.
Proceeds from the ₦230 billion issuance will fund key socio-economic infrastructure projects across Lagos, from transportation networks to public utilities. Debt repayment will be managed through monthly transfers from the state’s Consolidated Debt Service Account (CDSA) and deductions via an Irrevocable Standing Payment Order (ISPO) approved by the Federal Ministry of Finance, which will channel inflows into a trustee-managed sinking fund.
In the first two years, ₦1.39 billion will be deducted monthly from the CDSA, increasing to ₦2.64 billion for the remainder of the bond tenor. Additionally, ₦1.8 billion will be remitted monthly from ISPO deductions linked to Lagos State’s federation account allocations. While these inflows cover semi-annual interest payments during the moratorium, analysts caution that they provide no surplus buffer, highlighting the need for continued prudent fiscal management.
The successful bond issuance underscores Lagos State’s dominance in Nigeria’s subnational capital market, enhancing its reputation as a reliable issuer with robust financial governance. GCR’s stable outlook reflects confidence in the state’s ability to maintain strong operating performance while advancing critical capital projects that will benefit millions of residents.
source: dailytime