LAGOS (Reuters) -

Nigeria's oil-producing state of Bayelsa issued a 50 billion naira bond to finance infrastructure development, the lead issuing house said on Thursday, the fifth state to tap the market in recent months.

The 7-year bond, which is fully underwritten, was issued with a 13.75 percent coupon.

[size=15pt]"Bayelsa State has undertaken this bond issue primarily to reduce its interest costs, improve the overall cash flow of the state as well as extend the tenor of its facilities to enable it to match its infrastructure needs with longer tenored funds," according to the prospectus seen by Reuters.[/size]

The bond will be listed on the Nigerian Stock Exchange by the end of July.

Credit ratings agency Fitch last week gave Bayelsa long-term foreign and local currency ratings at 'B' and a national long-term rating of 'A-(nga)'.

[size=14pt]At least four of Nigeria's 36 states have issued bonds in recent months and analysts say Benue and Edo states were among others expected to issue their own bonds before the end of the year as Africa's most populous nation tries to find alternative funding sources to finance its huge infrastructure gap.[/size]

Nigeria distributes federal oil revenues among its 36 states which they use to finance infrastructure projects and run government. But with lower oil prices in recent months, state governments have had to look for other ways of raising finance.

Nigeria removed all taxes and cut transaction fees for sub-national and corporate bonds in March, further spurring interest in the fledgling debt market.

http://af.reuters.com/article/investingNews/idAFJOE6600RQ20100701

They should ban states from raising bonds until corruption is arrested.

It is bad enough that politicians already steal today's money, but it would be a shame if these same people have access to funds that will be paid back by the next generations.

this would have been so funny if it was not a serious matter.
These men are beginning to loot the future.
With the inherent risk of default due to corruption and instability of governance, i wonder who is underwriting these sorts of bonds.

Nigerian politicians!!! So the federal allocations + IGR are no longer enough to run states, even the oil producing ones that also get derivation? These guys looted the past, have looted the present and are now looting the future. And this is why they are asking for more states - to go on more looting spree. What has this state governor achieved in 3 yrs, as small as Bayelsa is? Yet the Jonathan Goodluck approved this bond that is coming at the twilight of the regime. Don't even expect any development in the state because a major part of the proceeds of the 7-yr bond will go into servicing of existing debts.

Nigerian politicians!!! So the federal allocations + IGR are no longer enough to run states, even the oil producing ones that also get derivation? These guys looted the past, have looted the present and are now looting the future.  And this is why they are asking for more states - to go on more looting spree. What has this state governor achieved in 3 yrs, as small as Bayelsa is?  Yet the Jonathan Goodluck approved this bond that is coming at the twilight of the regime.  Don't even expect any development in the state because a major part of the  proceeds of the 7-yr bond will go into servicing of existing debts.

Honestly no serious State can use short term funds for long term development. . .
so this is a welcome development. .

If u read the article,u will see they will use part of the bond raised [size=14pt]"to reduce its interest costs, improve the overall cash flow of the state as well as extend the tenor of its facilities to enable it to match its infrastructure needs with longer tenored funds,"[/size]

What that means is the state currently has short term loans from banks for which it pays probably 20% plus
It will retire those loans

One thing u gotta know is that it probably costs 2 times more to build infrastructure in the swamp of Bayelsa
than in any other part of Nigeria. .

I dont see anything wrong with the Bond issue
and more Nigerian States should go for it

Bayelsa state should be the last to be talking about bonds.
Even if it cost five times to develop the swamp, the amount of money Bayelsa state have received is enough bring development.

good

Ibime:

They should ban states from raising bonds until corruption is arrested.

It is bad enough that politicians already steal today's money, but it would be a shame if these same people have access to funds that will be paid back by the next generations.

Agreed; it is bad enough that proceeds from oil has been mis-appropriated over the last 40 years, subjecting future generations to massive debt should be avoided. Nigeria's political class has shown itself to be corrupt, inept, and criminal.

A Welcome Development. We need to see the impact in the lives of the people

mbulela:

this would have been so funny if it was not a serious matter.
These men are beginning to loot the future.
With the inherent risk of default due to corruption and instability of governance, i wonder who is underwriting these sorts of bonds.

creepy stuff!!

Ibime:

They should ban states from raising bonds until corruption is arrested.

It is bad enough that politicians already steal today's money, but it would be a shame if these same people have access to funds that will be paid back by the next generations.

mbulela:

this would have been so funny if it was not a serious matter.
These men are beginning to loot the future.
With the inherent risk of default due to corruption and instability of governance, i wonder who is underwriting these sorts of bonds.

Exactly. They are stealing tomorrow's money today.

paddy_lo:

Honestly no serious State can use short term funds for long term development. . .
so this is a welcome development. .

If u read the article,u will see they will use part of the bond raised [size=14pt]"to reduce its interest costs, improve the overall cash flow of the state as well as extend the tenor of its facilities to enable it to match its infrastructure needs with longer tenored funds,"[/size]

What that means is the state currently has short term loans from banks for which it pays probably 20% plus
It will retire those loans

One thing u gotta know is that it probably costs 2 times more to build infrastructure in the swamp of Bayelsa
than in any other part of Nigeria. .

I dont see anything wrong with the Bond issue
and more Nigerian States should go for it

Infrastructure building?

Yeah right. . . . we'll believe it based on their current records which is not only less than encouraging, but infuriating.

This bond issue is one of the most pressing issues in Nigeria now.

State Governors are now clued up to the fact that they can loot the future as well as the present. . .

Already Gbenga Daniel is hiring women to protest naked in Ogun state because Ogun legislators would not allow him to float a N100bln bond. . . .

What part of financial management involves hiring women to go naked?

I would not trust not these cows to run a cornershop much less handle the proceeds from bonds. . . .

mbulela:

this would have been so funny if it was not a serious matter.
These men are beginning to loot the future.
With the inherent risk of default due to corruption and instability of governance, i wonder who is underwriting these sorts of bonds.

Damn! No present day funds to steal? Solution; steal from future funds!
I shouldn't be laughing, because it really isn't funny. They say Nigeria is getting broke, so our criminals are learning new tricks of how to steal money that their grand children will pay for.
As we used to say when we were kids, "God soda dia yansh!" The bastar'ds.

paddy_lo:

Honestly no serious State can use short term funds for long term development. . .
so this is a welcome development. .

If u read the article,u will see they will use part of the bond raised [size=14pt]"to reduce its interest costs, improve the overall cash flow of the state as well as extend the tenor of its facilities to enable it to match its infrastructure needs with longer tenored funds,"[/size]

What that means is the state currently has short term loans from banks for which it pays probably 20% plus
It will retire those loans

One thing u gotta know is that it probably costs 2 times more to build infrastructure in the swamp of Bayelsa
than in any other part of Nigeria. .

I dont see anything wrong with the Bond issue
and more Nigerian States should go for it

Paddy_lo, you are too intelligent to believe and trust these gangsters and in the process apply classic economic theories to validate their schemes.
There is nothing wrong with bonds but there is everything wrong with Nigerian state governments goingto the bond market.considering the fact that these men might not be there in two years time, to mortgage a state for a 20 year bond is irresponsible.
Government is Nigeria is not a continous project.
These gangsters will begin some white elephant projects with the proceeds from the bond, then their successors will come and scrap the project while still servicing the bond with taxpayers money.
With the money they get allocated that is interest free and not repayable, what do they do,apart from stealing it?
How can he that is unfaithful with little be put in charge of more?
This morally reprehensible, before God, man and even the devil.

scam!

Stealing by method

Bonds can only work in an organised system, not a state like Bayelsa where every era is loot full, by the time is fails soon they would have been sooo rich that they will be almost above d law,
thinking>>>> some idi0ts will actually buy into this and retire, lol