Lagos Secures AA-(NG) Rating on Landmark ₦230bn Bond Issue
Global Credit Rating (GCR) has assigned an AA-(NG) national scale long-term rating, with a stable outlook, to Lagos State Government’s ₦230 billion Series 4 Senior Unsecured Fixed Rate Bonds, marking a significant milestone in the state’s ₦1 trillion debt issuance programme.
The bonds, priced at 16.25% and maturing in November 2035, are direct, unconditional, and unsubordinated obligations of the state, ranking pari-passu with all other bonds under the programme. Analysts note that the rating mirrors the issuer’s senior unsecured rating, as no additional credit enhancement accompanies the inflows earmarked for servicing the debt.
Proceeds from the issuance will fund critical socio-economic infrastructure projects across Lagos. Repayment obligations will be managed through monthly transfers from the state’s Consolidated Debt Service Account (CDSA) and deductions via an Irrevocable Standing Payment Order (ISPO) approved by the Federal Ministry of Finance. These inflows will be channelled into a sinking fund overseen by bond trustees.
During the first 24 months, ₦1.39 billion will be deducted monthly from the CDSA, rising to ₦2.64 billion for the remaining tenor.
Additionally, ₦1.8 billion will be remitted monthly from ISPO deductions tied to Lagos State’s federation account allocations. While these inflows provide 1x coverage of semi-annual interest payments during the moratorium period, analysts caution that they offer no surplus buffer. GCR emphasised that the stable outlook reflects confidence in Lagos State’s ability to maintain strong operating performance, ensuring adequate debt service coverage while advancing capital project implementation.
This issuance underscores Lagos State’s continued dominance in Nigeria’s subnational capital market, reinforcing its reputation as a leading issuer with robust fiscal management.
