By Lazarus IBEABUCHI
Osun State Governor
State plans to issue a N30 billion seven year bond this year to help fund infrastructure projects. The state is expecting final approvals from the Securities and Exchange Commission and the Finance Ministry before launching the issue, which would be priced to yield 14.5 percent yield. He did not give a time frame, an adviser to the issue said on Tuesday.
Among the areas where the fund will be channeled include roads, schools, agriculture and hospitals which are in dire need of upgrading, the State’s Commissioner for Finance, Economic Planning and Budget, Dr. Wale Bolorunduro said. BN Bolorunduro listed the Gbogan-Osogbo, Osogbo-Iwo roads among those to be given priority by the government after accessing the bond.
He said all documentations on the credit had been perfected and that it would be ready within the next one month. The Commissioner explained that approaching the capital market is one of the best methods of funding developmental projects, stressing that “it is suicidal to do developmental projects with commercial loans”. He said the state government is looking for long concessionary loans from global financial institutions like the World Bank and China Exim Bank.
Currently, the value of bonds issued by eleven state governments stands at about N332 billion. Data obtained from the Securities and Exchange Commission, SEC shows that Kaduna State has a bond issue of N8.5 billion with coupon rate of 12.5 per cent and will mature in August 2015; Niger State issued N6 billion with a coupon rate of 14 per cent 5 year Bonds to mature in October 2014; Kwara State issued N17 billion with coupon rate of 14 per cent 5 year Bonds in to be redeemed in August, 2014; Lagos State issued N57.5 billion 10 per cent 7yr Bonds with redemption date in April, 2017; Lagos State also issued N50 billion 13 per cent 5-year Bonds with maturity in February 2014; Bayelsa State issued N50 billion 13.75 per cent 7-yr Bonds to mature in June 2017.
Others are Imo State bond issue of N18.5 billion with coupon rate of15.5 per cent to mature in 2016; Ebonyi State issued N16.5 billion 13% 5-yr Bonds with redemption date in September 2015; Edo State issued N25 billion 14% 7-yr Bonds with redemption date in December 2017; Ekiti State N20 billion fixed rate infrastructure development bond 2018; and Delta State issued N50billion bond with a maturity date in 2018. Benue State N13 billion fixed rate development bond 2011/2016 Series 1 was admitted into the Daily Official List in March this year with Coupon rate is 14% and the Maturity date is May, 31 2016.