Rating Release
Agusto & Co. hereby affirms the “Aa“ rating assigned to the Lagos State Government’s ₦100 Billion Series III Bond
The rating expires on 30 September 2024.
Agusto & Co. hereby affirms the “Aa“ rating assigned to the Lagos State Government’s (“the Issuer”, “LASG”, “Lagos” or “the State”) ₦100 billion 12.25% Ten-Year Fixed Rate Series III Bond Due 2030 (“the Issue” or “the Bond”). The assigned rating underpins our opinion on Lagos State’s robust financial condition as well as very strong capacity to service the Series III Bond obligations (coupon and principal) jointly from the State’s Consolidated Debt Service Account (“CDSA”) through internally generated revenue (IGR) receipts and monthly Irrevocable Standing Payment Order (“ISPO”) deduction from the LASG’s share of statutory allocation into a designated sinking fund account (SFA) to meet the Bond obligations as and when due. In January 2020, the Lagos State Government issued a ₦100 billion Series III Bond to finance infrastructure projects across various sectors in the State. The Bond has a fixed coupon rate of 12.25% which is being paid semi-annually until its maturity in January 2030, while the principal is being amortised half-yearly following the expiration of a 24-month moratorium in January 2022. In addition, the Series III Bond is callable by Lagos State after five years from the issue date subject to obtaining regulatory approvals and issuance of 30 days’ notice to the Bondholders. In line with the Trust Deed, the Bond obligations are expected to be serviced from inflows into the SFA. The SFA is in turn expected to be funded in the sum of ₦50.8 million monthly from LASG’s IGR for 24 months and thereafter ₦694.4 million over the remaining 96 months. Also, the SFA will be funded via a monthly ISPO deduction of ₦1 billion over the Bond tenor.
The opinions expressed in this rating release do not represent investment or other advice and should therefore not be construed as such. Visit www.agusto.com for further information.