SEC, NSE approve N27bn Ondo State bond

As major steps towards itsdevelopment strategy, the Securities & Exchange Commission and the Nigerian Stock Exchange, at the weekend, approved the bid by the Ondo State government to raise fresh funds through its N50billion Debt Issuance Programme under which the state intends to issue a first tranche of N27 billion.The state will be the twelfth state to approach the capital market since the first debt issuance programme by Lagos State in February, 2009.The lead issuing house to the state on the bond issuance programme is Radix Capital Partners Limited. Other issuing houses are FBN Capital Limited, FCMB Capital Markets Limited, Fidelity Bank PLC, Longterm Global Capital Limited, Skye Financial Services Limited, Stanbic IBTC Bank PLlc, Standard Chartered Bank and Union Capital Markets Limited.According to a notice, the approvals for the bond came against the backdrop of Ondo State government's compliance with the constitutional and legal framework for borrowing money to finance developmental projects.It will be recalled that the Investment and Securities Act (ISA) requires a state desiring to borrow money to enact a law authorising the issuance of bonds and specifying that a sinking fund fully funded from the consolidated revenue fund account be established. The Ondo State Issuance of Debt and other Securities Law 2011('the Bonds Law') was enacted and all the necessary approvals obtained.The Ondo State government said recently that it had embarked upon an aggressive redevelopment of the state even as it is endowed with abundant natural resources like huge mineral deposits and rich forest reserves which create enormous potential for industrial and economic growth.The state has also experienced strong growth in its revenue potentials with its IGR and VAT growing by a compound average growth rate (CAGR) of 23 per cent and 25 per cent respectively between 2006 and 2010, a clear manifestation of the increasing levels of economic activities within the state.The government has projected a further 52 per cent increase over its 2010 IGR of N5.5billion to N8.4 billion in the 2011 fiscal year and a CAGR of 22 per cent till 2014. The state expects to achieve this IGR growth through initiatives which facilitate the reduction of fiscal leakages, upward review of economic rates, aggressive mobilisation of taxes and introduction of electronic governance in its revenue collection activities.
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