The Lagos State House of Assembly has approved Governor Babajide Sanwo-Olu’s request of ₦85 billion special dispensations for bond redemption as well as ₦85 billion for bridge loan for a quarter.
The House stated that it is in pursuant to the approval of Bonds, Loans and other Security Law of Lagos State 2015 and comes at 9.25 percent annually to bond financing programme.
Speaking on this, Chairman of the committee on Finance, Hon. Rotimi Olowo stated that the terms of reference of the request received from the executive arm appraise the request for a special dispensation;.
He added that it also enquires into the debt profile of the State and ascertain the source of the fund for repayment and refinancing.
According to Olowo, based on briefing and documents received, the redemption of bonds will allow for the extension of the maturity of the same with a two years moratorium in 2031 and the special dispensation approval will enable the State earmarks for capital projects.
He explained that the request from the governor had two aspects, with the first for approval for Bond Bridge Loan which would allow the state to access the bond market as soon as possible while the second aspect is a loan from a commercial bank at the interest rate of 9.25.
Olowo explained that as of February this year, the federal government went to the bond market at a coupon rate of 12 percent saying that in June it had increased to 13.5 percent.
He also said comparing the rate with the bond secured by the state government in 2016 and 2017, the least of all was 16.6 percent, adding that the highest was around 17.25 percent.
Olowo explained that the opportunity the market provided was enough for the state to access it now, adding that the state would be able to get the rate cheaper and that the current bond of the state would mature in 2024.