Nigeria has emerged the largest sub-national bond market in Africa. This followed the floating of a new N80 billion ($507.9 million) bond by the Lagos Government. With 448.6 billion ($2.8 billion) of debt in the Nigerian municipal and sub-national bond market, it is the largest such market of all African countries. South Africa’s sub-national bond market has outstanding debt of 14.1 billion Naira ($ 89.5 million) – a significantly smaller sum than the total debt of Nigerian sub-national debts.

The state of Lagos earlier this month announced a third round of bond issuance, inviting expressions of interest from investors for the sale of 80 billion naira ($507.9 million) of Lagos state bonds, for a seven year period.
Closing book-building on last week, sector analysts expect that Lagos will easily raise the N80 billion ($507.9 million) that it hopes for. This according to Senior bond analyst at stockbroking company at Vevita Capital, Abiodun Oliyide: “It is likely that Lagos will get more than the N80 billion it is trying to raise…The Lagos bond issue was pretty much oversubscribed.”

This latest round of bond issuance was declared with a view to completing important infrastructure projects across the small state of Lagos – which despite its size, houses 22 million of Nigeria’s 162 million member population.
A business-hub in the West-African country, Lagos has seen a swelling in the number of its inhabitants as more and more people come to the state for business purposes. The infrastructure has as such become inadequate to meet the needs of the population, in particular, the transport system requires expansion.

Ambitious government plans for an urban-railway system across Lagos, and further infrastructure projects, have been halted over recent months due to a lack of funds, to be addressed with the present sale of bonds.
Only 13 of Nigeria’s 36 states currently have outstanding debt issued, and it is thought that positive yields on the present Lagos bond sale could prompt other states to turn to bond issuance to raise funds for infrastructure development.

By Lily