The Osun State has announced plans to embark on a N30bn ($190m) bond issuance programme.
The bond, a seven-year instrument, would be raised to finance various infrastructural and developmental projects across the state.
An adviser to the issue, who disclosed this to Reuters on Tuesday anonymously, said at present the state needed funds for various upgrades of its facilities.
According to him, the state, with a population of about 2.3 million people, is in dire need of upgrading of its roads, schools and hospitals.
The source said the state was expecting final approvals from the Securities and Exchange Commission and the Ministry of Finance before inaugurating the issue, which would be priced to achieve 14.5 per cent yield.
He, however, did not give a timeframe for the project.
Within the last two years, about nine state governments had received approval to raise N217bn bonds from the capital market.
The states received the approval following their applications to relevant authorities to raise funds from the market, mainly for developmental purposes.
Investigations by our correspondent also revealed that most state governments in Nigeria had started approaching the capital market to raise bonds to further boost development in their states as a result of the inadequate allocations they receive.
A statement obtained from the website of SEC showed that these nine states received approval between April 30, 2010, and June 30, 2011.
The Lagos State Government, which was the first to receive approval within this period, is offering for subscription N57.5bn (at) 10 per cent fixed rate, under the N275bn debt issuance programme, for the 2010/2017 (Series 2).
The state is leading the pack in terms of volume and value. So far it had raised N50bn in 2008 and N57.5bn in 2010, totalling N107.5bn raised in its first and second bonds issues in 2008 and 2010, respectively.
Also, Bayelsa State received approval to raise N50bn from the capital market in June 30, 2010. The state issued an offer for subscription of N50bn (at) 15.5 per cent Fixed Rate Development Bond between 2010/2017.
The Edo State’s 14 per cent six-year tenor fixed rate infrastructure development bond received approval on December 31, 2010, and was admitted on July 21, 2011.
Ebonyi State, on its part, has issued an offer for subscription of N20bn at 14 per cent Fixed Rate bonds between 2010/2015. The cost of the issue was put at 3.14 per cent of the gross proceeds plus 1.88 per cent underwriting fee. The application was approved on September 24, 2010.
Benue State Government also received approval by May 26, 2011, to raise N13bn at a 14 per cent Fixed Rate Development Bond between 2010 and 2015, while Kaduna State’s offer for subscription of N10bn at 14.5 per cent Fixed Rate bond under the N20bn debt issuance programme (Series 1) of between 2010 and 2015 was also approved on August 31, 2010.
Source: Punch
