LFZC unveils N10.5 billion infrastructure bond

By Helen Oji |   21 September 2021   |   2:44 am  

Lagos Free Zone Company (LFZC), has announced the successful issuance of N10.5 billion 20-year series 1 senior guaranteed fixed-rate corporate infrastructure bonds. The facility floated under an N50 billion debt issuance programme is due 2041.

Backed by an irrevocable and unconditional guarantee from InfraCredit, LFZC series 1 bond is accorded a ‘AAA’ long term credit rating by Agusto and Co. and GCR, reflecting the highest degree of creditworthiness for these bonds.

The series 1 bond, a 20-year guaranteed fixed bond, was oversubscribed by institutional investors including eleven domestic pension 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.

The series 1 bond priced at a modest premium to the comparable FGN sovereign bond, provides a unique opportunity for pension fund managers, life insurance firms and other institutional investors to match their long-term liabilities with low-risk, high yield assets.

Speaking on the transaction, the Chief Finance Officer (CFO) of LFZC, Ashish Khemka said the transaction is a testament to the capacity of the Nigerian debt market as a source of domestic capital for infrastructural development in Nigeria.

According to him, the response to the band program further strengthens LFZ commitment to realise its vision and thereby enhancing Nigeria’s competitive repositioning with continuous focus on ease of doing business parameters.

He said the infrastructure bond underscores Nigeria as a compelling industrial hub within the West African coast, even as the country prepares in anticipation of the imminent single market regime under AfCFTA.

“We are particularly excited by the confidence demonstrated by pension fund managers and other institutional investors at this debut issue and we appreciate the team at InfraCredit, StanbicIBTC Capital and other parties to the transaction for this novel structure, which helps to de-risk the transaction and aligns the interest of different stakeholders”.

According to the Chief Executive Officer of InfraCredit, Chinua Azubike, the transaction demonstrates the commitment towards inclusive access to long-term local currency finance for infrastructure development.

He said LFZC has set a new benchmark in the Nigerian domestic debt capital market, as the first 20-year corporate infrastructure bond in Nigeria, elongating the corporate bond yield curve and reinforcing the prospect for Nigerian corporates to raise long term finance within the local market.

He pointed out that the LFZC bonds validate the appetite of domestic pension funds and other institutional investors in financing viable long-term infrastructure assets.

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