Rating Release
Agusto & Co. hereby affirms the “Bbb+” rating assigned to the Ogun State Government
The rating expires on 30 September 2023.
Agusto & Co. hereby affirms the “Bbb+” rating assigned to the Ogun State Government (“Ogun”, “the State” or “OGSG”). The rating reflects the State’s resilient financial condition and adequate capacity to meet local currency obligations in a timely manner buoyed by its growing internally generated revenue (IGR) and share of centrally collected revenue. Although rising payroll and overhead costs elicited by higher inflationary pressures remain a challenge, we note that the State continues to promote a favourable operating environment for businesses and households with a view to further grow IGR in the near term. While we note the marked rise in OGSG’s public debts as well as the corresponding burden on financing flexibility in the future as a rating concern, we recognize positively that the concessionary rates, as well as the longer tenors offered for most of the State’s domestic debt, is expected to minimize the annual debt service burden.
In the financial year ended 31 December 2021 (FYE 2021), Ogun State recorded total revenue (including grants) of ₦166.9 billion (2020: ₦109.1 billion) and total expenditure of ₦255.2 billion (2020: ₦164.2 billion), resulting in a deficit of ₦88.3billion which was financed with borrowings. In the same period, OGSG posted a net operating cash flow (OCF) of ₦26.9 billion and an overall cash position of ₦34.9 billion. As at 31 December 2021, Ogun State reported total identifiable assets and liabilities of ₦1.81 trillion (2020: ₦1.70 trillion) and ₦309.8 billion (2020: ₦207.1 billion) respectively in line with the International Public Sector Accounting Standards (IPSAS) for recognizing and measuring assets and liabilities.
The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such.