Lagos Free Zone Company, the first free zone in Nigeria with a fully integrated deep seaport has completed the issuance of an N10.5 billion 20-year Series 1 Senior Guaranteed Fixed-Rate Corporate Infrastructure Bond, due in 2041, it announced on Thursday.
The 20-year bond was issued under LFZC’s N50 billion Debt Issuance Programme, the company said in an emailed statement.
Backed by an irrevocable and unconditional guarantee from InfraCredit, LFZC Series 1 Bond is accorded ‘AAA’ long-term credit rating by Agusto and Co. and GCR, reflecting the highest degree of creditworthiness for the bonds.
The Series 1 bond, which was priced at a 13.5% coupon rate, was oversubscribed by institutional investors, including 11 domestic pension funds, two insurance firms, banks and HNIs, the company said.
The transaction is the first 20-year, non-FGN bond to be issued in the Nigerian debt capital market and the first Securities and Exchange Commission-approved infrastructure bond for the development of an industrial hub, the statement noted.
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.
FGN’s 10-year benchmark bond has a yield of about 12.06%, while the 20-year bond has 12.815%.
LFZC is the infrastructure development subsidiary of Tolaram, the Singaporean conglomerate with more than 45 years of presence in Nigeria and business interests in consumer goods, infrastructure, and fintech space.
The LFZ is being developed as the largest integrated port-based economic zone in Nigeria and shall serve as the beacon of industrial development across the country and West Africa.
Commenting on the transaction, the Chief Finance Officer of LFZC, Mr. Ashish Khemka stated: “This is a milestone transaction for us at Lagos Free Zone Company and it is a testament to the capacity of the Nigerian debt market as a veritable source of domestic capital for infrastructural development in Nigeria.”
The CEO of InfraCredit, Chinua Azubike said, “It has been exciting working with Lagos Free Zone Company on this landmark transaction. It further demonstrates our commitment towards inclusive access to long-term local currency finance for infrastructure development.
“The LFZC bond validates the appetite of domestic pension funds and other institutional investors in financing viable long-term infrastructure assets.”
Also commenting on the transaction, Funso Akere, Chief Executive of Stanbic IBTC Capital Limited, said: “Stanbic IBTC Capital, FBNQuest Merchant Bank, and Radix Capital Partners, are delighted to have advised LFZC on this landmark 20-year infrastructure bond issuance, which evidences the depth and liquidity of the Nigerian debt capital markets and aligns with the pension fund industry’s growing demand for quality long-dated assets.”