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The Lagos Free Zone Co. (LFZC), a subsidiary Singaporean conglomerate Tolaram, has successfully issued a NGN 10.5bn 20-year Series 1 Senior Guaranteed Fixed Rate Corporate Infrastructure Bonds, the company said today. The issuance falls under a NGN 50bn debt issuance programme aimed at securing financing to expand what has become Nigeria’s most modern and integrated free zone, located on the outskirts of Lagos. The Lagos Free Zone is being developed along with the Lekki Deep Sea Port and will be the largest integrated port-based economic zone in Nigeria. It is being developed over 830 ha as part of a $2.1bn investment commitment by Tolaram, of which about half has been invested already. The company is expected to complete the deep sea port in 2022, at the same time when it would lay out a piped gas supply and distribution network to provide energy to its tenants. The port is currently under construction by the China Harbour Engineering Co. (CHEC) and will have its container terminal operated by CMA Terminals. Its Phase 1 development involves 2 container berths and one dry bulk terminal, with a capacity of 1.2 million TEUs and a draught of 16.5m. The bonds issuance announced this week is significant for Nigeria where unlocking domestic institutional capital remains a priority to bridge the infrastructure financing gap. The bond was backed by an irrevocable and unconditional guarantee from InfraCredit and was accorded a ‘AAA’ long term credit rating by Agusto and Co. and GCR, reflecting the highest degree of creditworthiness for these bonds. It was also oversubscribed by institutional investors including eleven domestic pensions funds, two insurance firms, banks and HNIs. “The transaction is the first 20-year non-FGN Bond issue in the Nigerian debt capital market and the first Securities and Exchange Commission approved Infrastructure Bond for the development of an industrial hub” LFZC said in a statement. Source: PenCom The latest data available from Nigeria’s National Pension Commission shows that the country’s pension funds have continued to shy away from investing in infrastructure funds. Despite a YoY growth of pension funds’ investments into infrastructure funds of +23% between July 2020 and July 2021, they still represent only 0.52% of Nigerian pension funds’ overall investment portfolio.
The Lagos State Government is preparing for the issuance of an NGN 25bn ($60m) green bond under the Nigerian Green Bond Market Development Programme (NGBMDP). State Governor Babajide Sanwo-Olu signed an MoU towards the issuance with the NGBMDP’s implementing partners, FMDQ Holdings and Financial Sector Deepening (FSD) Africa this week. The NGBMDP was launched in 2018 by FMDQ, FSD Africa and the Climate Bonds Initiative to support the growth of Nigeria’s non-sovereign debt capital market. It notably supported the development and issuance of Nigeria’s Green Bond Issuance Rules by the country’s Securities and Exchange Commission (SEC) in November 2018 and provided technical support to several issuers. Nigeria was the first nation to issue a sovereign certified climate bond back in 2017, followed by several of its companies. In 2019, Access Bank issued the first Climate Bonds Initiative (CBI)-certified corporate green bond in Africa, raising N15.0 billion. The 5-year, 15.50% fixed rate bond was fully subscribed. The same year, North South Power Company, through the NSP-SPV PowerCorp PLC, issued its Series 1 N8.5 billion Green Bond, which was the first certified corporate green bond and the longest tenured (15 years) corporate bond issued in the Nigerian debt capital markets approved by the SEC. Lagos State is about to become the first issuer of a subnational green bond in Nigeria as it seeks to diversify its financing sources and support sustainable development across the state. On September 10th, its national long-term rating was upgraded to AAA by Fitch Ratings, while its LTR, STR and local currency long-term issuer default ratings were affirmed B.
