InfraCredit, a ‘AAA’ rated specialised infrastructure credit guarantee institution has announced its guarantee of Lagos Free Zone Company’s (LFZC) N20 billion 20-year Series II Senior Guaranteed Fixed Rate Infrastructure Bonds Due 2042 under a N50 billion Debt Issuance Programme.

According to a statement, leveraging the irrevocable and unconditional guarantee of InfraCredit, the LFZC Series II Bond reinvigorates the benchmark set by the LFZC Series I Bond, as the second 20-year non-FGN Bond issue in the Nigerian debt capital market for the development of an industrial hub in Nigeria.

Speaking on the transaction, the Chief Finance Officer, 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 response to this bond program further strengthens our commitment to realise our vision and thereby enhance Nigeria’s competitive positioning with our continuous focus on Ease of Doing Business parameters.

“LFZ further underscores Nigeria as a compelling industrial hub within the West African coast and ideally orients itself 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 milestone issue and we appreciate the team at InfraCredit, Stanbic IBTC 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 CEO of InfraCredit, Chinua Azubike, “This is yet another milestone transaction, and we are pleased to have supported the successful issuance of this Series II Bonds following the maiden issuance in 2021, which is particularly significant due to its improved pricing, the unprecedented scale and wide reach of domestic institutional investors.

“The success of special economic zones in Nigeria is critical to accelerating industrialisation, attracting local and foreign direct investment, job creation, and inclusive growth, however one key barrier we have unlocked with our guarantee, is enabling companies like LFZC access up to 20 years of local currency finance from domestic pension funds at scale to match the long-term lifecycle of infrastructure investment needed to develop these zones, it is evident that local pension fund investors are playing an important role in supporting private sector-led infrastructure development in Nigeria.

“This Series II Bond has further deepened the debt capital market, the oversubscription revalidates the appetite of domestic pension funds and other institutional investors in financing viable long term infrastructure assets.”

The LFZC is the infrastructure development subsidiary of the Tolaram, the Singaporean conglomerate with more than 45 years of presence in Nigeria and business interests in consumer goods, infrastructure, and fintech space.

The Lagos Free Zone is being developed as the largest integrated port-based special economic zone in Nigeria and shall serve as the beacon of industrial development across Nigeria and West Africa.

Enterprises operating in the Lagos Free Zone would benefit from various policy incentives underpinned by the legislative framework applicable for free zones in the country.

In line with its vision statement “to be the preferred industrial hub in West Africa, with world-class infrastructure,” the Lagos Free Zone is equipped with world-class shared industrial infrastructure necessary for attracting foreign direct investments into Nigeria.

Backed by an irrevocable and unconditional guarantee from InfraCredit, LFZC Series II Bond was accorded a ‘AAA’ long-term credit rating by Agusto and Co. and GCR, reflecting the highest degree of creditworthiness for these bonds.

The Series II Bond, a 20-year Guaranteed Fixed Bond, was oversubscribed by 165 percent from institutional investors including ten domestic pension funds.

The transaction was the second 20-year non-FGN Bond issue in the Nigerian debt capital market and reinforces the appetite of domestic institutional investors for the long-tenured non-FGN instrument.

The Series II Bond priced at a modest premium to the comparable FGN Sovereign Bond provides a unique opportunity for pension fund managers, and other institutional investors to match their long-term liabilities with low-risk, high yield assets.

Stanbic IBTC Capital Limited acted as Lead Issuing House/Bookrunner and FCMB Capital Market Limited, FSDH Capital Limited, and Radix Capital Partners Limited acted as Joint Issuing Houses and Bookrunners for the transaction.

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