Plans by the Ondo State Government to raise N27bn bond from the Nigerian capital market has received the approval of the Securities and Exchange Commission.

The Nigerian Stock Exchange has also given approval to the state to raise the first tranche of N27bn in bonds as part of its N50bn debt issuance programme. This will be the 12th state to approach the market since Lagos State began the debt issuance programme in 2009.

A statement made available to our correspondent on Friday, noted that the approval came following the fact that the state had complied with the constitutional and legal framework for borrowing money to finance developmental projects.

The statement said, “The Investment and Securities Act requires that a state desiring to borrow money should enact a law authorising the issuance of bonds and specifying that a sinking fund fully funded from the consolidated revenue fund account be established.

“The Ondo State Issuance of Debt and other Securities Law 2011(“the Bonds Law”) was enacted and all the necessary approvals have been obtained.”

It added that the bond with a rating of A and A- respectively by Agusto and Global Credit Rating, respectively is a “general obligation bond.”

“This means that repayment will be made from current and future resources of the State, and the State has obtained an Irrevocable Standing Payment Order from the Ministry of Finance authorising deduction of interest and principal from its share of the Federal Allocation at source,” the statement said.

The ISPO immunises the Ondo State bond from the default risk associated with other debt issuance programme.

It quoted the Governor, Dr. Olusegun Mimiko, as saying that the proceeds from the bond would be used to pursue the aggressive infrastructural rejuvenation, which would serve as a spring board for the state’s industrial development.

He said, “These include the construction of well maintained roads and water ways, the provision of portable water and strengthening of electricity infrastructure, the construction of ultra modern Mother and Child Hospitals dedicated to treating pregnant women and children, an initiative that has won the state laurels from the international community, will be further entrenched.

“On the education front, New Caring Heart Mega primary and secondary schools with science and computer laboratories, playing fields and other modern amenities would be put up, the sate’s agriculture is also expected to be lifted from its largely subsistent status into commercial basis providing employment and source of wealth and well being for farm households.”

The statement added that the lead Issuing House to the state on the bond issuance programme was Radix Capital Partners Limited.

Other Issuing Houses are FBN Capital Limited, FCMB Capital Markets Limited, Fidelity Bank Plc, Long-term Global Capital Limited, Skye Financial Services Limited, Stanbic IBTC Bank Plc, Standard Chartered Bank and Union Capital Markets Limited.

Source: Punch/Udeme Ekwere