[size=13pt]States’ bond borrowing to hit N502bn in Dec[/size]

If all the relevant regulatory bodies give their approval, borrowing by state governments in the bond market will total N502bn by the end of 2011.


Already, nine state governments received approval to raise a total of N217bn from the bond market between April 30, 2010 and June 30, 2011.


In addition to this, the Kaduna State Government has also issued a N10bn bond.


With the planned bond issuance of N25bn by the Ekiti State Government and N250bn by the Rivers State Government, the figure is set to hit N502bn before the end of the year.


Ekiti State, for instance, is on the verge of beginning its N25bn bond issuance programme before the year runs out.


A source close to the government told our correspondent on Thursday that the issuance would commence next month.


The source, who did not want to be named because he was not permitted to speak on the issue, noted that already, almost all the paper work had been completed.


“We will be coming to the market to raise N25bn and we have received almost all the relevant approvals. We are looking at between three weeks and a month maximum to commence the issuance,” he said.


The state’s Commissioner for Information, Mr. Funminiyi Afuye, said the bond from the capital market was a part of visualising the government’s industrial plans for the state.


He said that the bonds, when raised, would be used to address the eight-point agenda of the State Governor, Dr. Kayode Fayemi.


Also, the Rivers State government, under the leadership of Mr. Rotimi Amaechi, has said his administration plans to issue a N250bn bond in the capital market to fund major developmental projects.


The governor’s spokesperson, Mr. David Iyofor, said the bond would be used in funding specific projects, such as the Greater Port Harcourt City; the Port Harcourt Monorail project; and the new Rivers State University of Science and Technology Phase 1.


He had also added that the state planned to approach the capital market in October 2011, to raise the fund in two tranches of N100bn and N150bn.


“Already, the state House of Assembly has given the nod for the governor to go ahead and obtain the bond as such projects cannot be accomplished by sheer reliance on federal allocation and internally generated revenue that comes in trickles,” he said.


A statement obtained on the website of the Securities and Exchange Commission showed that nine states had received approvals between April 30, 2010 and June 30, 2011.


The Lagos State Government, which was the first to receive the approval within this period, is offering for subscription N57.5bn 10 per cent fixed rate, under the N275bn debt issuance programme for the 2010/2017 (Series 2).


The state, leading the pack in terms of volume and value, had raised N50bn in 2008 and N57.5bn in 2010, totalling N107.5bn in its first and second bond issues.


Also, Bayelsa State received the approval to raise N50bn from the capital market in June 30, 2010. The state issued an offer for subscription of N50bn 15.5 per cent Fixed Rate Development Bond between 2010 and 2017.

http://www.punchng.com/Articl.aspx?theartic=Art20110930121437

What is Bayelsa state, with its small population relative to what it receives from the Federation Account, doing with a N50b bond? What has been happening in that state for the past 12 years?  In fact, that should be the state with the highest rate of development in Nigeria.

What has it done with Federation account receipts of say 10 years?  If this cannot be accounted for, what's the assurance that the N50b bond which is tantamount to partly spending future revenues of 7 years in advance will be judiciously utilized? If corruption does not kill this country, then nothing else can.

It is this Bayelsa template that we should apply to all these states that are jostling for bonds.  In addition to spending the past and present revenues (from Federation account and IGR), without little or nothing to show for it, they are now spending future revenues and thereby creating problems for future governments.

Please note, I do not have problems with bonds if funds are being utilized judiciously on projects that lift Nigerians out of poverty and suffering and improve the infrastructural capacity of Nigeria across the states.

The rate at which states are hitting the bond market for funds is giving one concern for worry seeing there is no justifiable evidence in infrastructural devt.
Personally I'm interested in those marketed by the FG and maybe financially viable states like Lagos& Rivers yet I shudder to think of the investors fate if those 9ja local government areas mistakenly tagged states default.
Make I no mention names of such places

ochukoccna:

[b]The rate at which states are hitting the bond market for funds [/b]is giving one concern for worry seeing there is no justifiable evidence in infrastructural devt.
Personally I'm interested in those marketed by the FG and maybe financially viable states like Lagos& Rivers yet I shudder to think of the investors fate if those 9ja local government areas mistakenly tagged states default.
Make I no mention names of such places

And it is worrisome that that rate is not matched by the rate of growth of new infrastructure or maintenance of existing ones.

Nigerians should start panicking now - because payback will fall on the heads of citizens.

Future state allocations will be ccompletely consumed by debt repayments.

And then those in power at the time wil have to borrow more to service the debts incurred by these rogues in power right now.

A whole oil producing nation like Nigeria now cannot get by without borrowing - It makes me want to do a 'Buhari' and breakdown in tears.




N502bn And rising . . . . . .

Anambra state is not among these debtor states.
Peter Obi is wise.

@Sun of God, this figure is enough to put Nigerians in a panic mode. If people continue to show apathy, most of these leaders do not give a hoot. They are ready to put their states in the red for the next 50 years so as to fund their present consumption and greed.

Hmm almost $3.2billion, that a hug amount, I expect to see viable Infrastructures and Growth as well equal to $3.2billion. Come to think of it, are states NOT capable of generating income on their own? Must they issue Bonds to satisfy their quest for development?

yeah when they default they would start begging for debt forgiveness and the fiscally responsible states would have to bail them. None of these people know how to generate wealth but they are very good at consumption and manufacturing serious beaurecracies. These people are a complete disgrace.

Nigerian governors have been borrowing from the bond market with impunity. something has to be done about this.

How about Lagos? or is Lagos not among the state that has been shuttling within the Bond Market? Can somebody give us Lagos figure.