Ibekimi Oriamaja Reports
A new trend in the primary issuance market was established by the first 20-year corporate bond to be offered on the capital market, which registered roughly a double of the offer size.
The N25 billion 20-year, 13.25 percent Series 2 Senior Guaranteed Fixed Rate Infrastructure Bond issued by the Lagos Free Zone (LFZ) had a subscription rate of 1.7 times, which indicates that it was 70% oversubscribed.
A closing gong ceremony was held yesterday to honor the historic issue and listing on the Nigerian Exchange (NGX) and the Lagos Free Zone (LFZ). The Tolaram Group’s infrastructure development company, LFZ, established Nigeria’s first private free trade zone.
LFZ listed its maiden issue of N25 billion, 20-Year 13.25 per cent Series 2 Senior Guaranteed Fixed Rate Infrastructure Bonds Due 2042 on the NGX through its special purpose company, LFZC Funding SPV Plc. Under the company’s N50 billion bond issuance initiative, the bond was issued.
Mr. Jude Chiemeka, Divisional Head, Funding Markets, Nigerian Exchange (NGX), referred to the 20-year bond as a landmark transaction and proof of the Nigerian debt market’s potential as a reliable local source of capital for infrastructural initiatives in Nigeria.
According to him, LFZC has set a new benchmark in the domestic debt capital market of the nation with the second issuing of the N25 billion Series 2 Bond, the first 20-year corporate infrastructure bond in Nigeria.
It has lengthened the yield curve on corporate bonds and given Nigerian corporations better chances of obtaining long-term funding from the market. The LFZC Bonds confirm institutional investors’ and domestic pension funds’ determination to finance financially sound long-term infrastructure investments, according to Chiemeka.
He urged LFZC and other private issuers to make greater use of the NGX platform in order to finance their future needs and assist their corporate strategy-aligned business expansion.
According to Mr. Dinesh Rathi, chief executive officer of LFZC, the bond is a part of a N50 billion bond program that was started last year.
The longest-lasting bond in Nigeria’s debt capital market, he added, is a 20-year fixed-rate instrument.
He emphasized that the bond’s 1.7 times oversubscription clearly demonstrated Nigerian investors’ need for a long-term note paper on the country’s debt capital market.
With our ongoing focus on the dimensions of ease of doing business, this financing will further strengthen our commitment to realizing our goal and improve Nigeria’s competitive stance, according to Rathi.
According to Mr. Daniel Mueller, chief operating officer of InfraCredit, the bond showed continued dedication to ensuring that everyone has access to long-term local currency financing for infrastructure development.
According to Mueller, “The LFZC Bonds reaffirm the interest of domestic pension funds and other institutional investors in funding sustainable long-term infrastructure assets.”
LFZ was created to give businesses access to the West African market’s full potential by giving them access to top-notch facilities and services that make conducting business simple.
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