Rating Release

Agusto & Co. hereby assigns an indicative “Aa” rating to the Lagos State Government’s (“Lagos State”, “Lagos”, “LASG”, “the Issuer” or “the State”) proposed ₦200 billion Series IV: 10-Year Fixed Rate Bond Due 2035 (“Series IV Bond”, “the Bond” or “the Issue”) under its ₦1 Trillion Debt and Hybrid Instruments Issuance Programme (“DAHI” or “the Programme”)

The rating expires on 30 September 2026. 

Agusto & Co. hereby assigns an indicative “Aa” rating to the Lagos State Government’s (“Lagos State”, “Lagos”, “LASG”, “the Issuer” or “the State”) proposed ₦200 billion Series IV: 10-Year Fixed Rate Bond Due 2035 (“Series IV Bond”, “the Bond” or “the Issue”) under its ₦1 Trillion Debt and Hybrid Instruments Issuance Programme (“DAHI” or “the Programme”). The assigned rating reflects our opinion on the State’s strong capacity to service the Series IV Bond obligations (coupon and principal) jointly from its Consolidated Debt Service Account (CDSA) funded from monthly internally generated revenue remittances and the issuance of an Irrevocable Standing Payment Order (ISPO) (to be) approved by the Federal Ministry of Finance. The rating is further strengthened by Lagos State’s very good financial condition, supported by its sustainable cash-generating capacity, balanced expenditure profile and robust ability to meet local currency obligations from its internally generated revenue (IGR), which averages 70% of its total revenue. In addition, the State benefits from a stable political environment characterised by effective coordination across tiers of government. Nonetheless, the rating is tempered by LASG’s growing public debt, particularly unhedged foreign currency exposures that heighten vulnerability to exchange rate depreciation. These risks are moderated by the State’s relatively low debt service-to-revenue ratio, supported by concessional terms and long maturities on its borrowings.