Governor Babatunde Fashola
Fitch Ratings has raised its outlook on Lagos state to positive from stable, citing “improving debt management” and moves towards a balanced budget by 2015.
Bloomberg quoted Fitch to have said Wednesday that increasingly, bonds with “fixed repayment schedules, longer maturities and monthly provisions into the debt reserves fund, were replacing the traditional concentration of short-term bank loans” for Lagos State.
“Fitch views this as a sign of the state’s improving debt management,” it added.
Lagos State Government had sold N80 billion ($505 million) of debt last November, its third and biggest issue in six years, to fund developments including an urban rail system that needs about $1 billion to complete. The seven-year notes were priced with a 14.5 percent coupon.
With an estimated population of 20 million, Lagos is the top contributor to the economy out of Nigeria’s 36 states and might grow 10 percent this year, according to Fitch. ‘Tax contributions to revenue may reach 80 percent in 2015 from 70 percent due to improved collection.”
Governor Babatunde Fashola of Lagos State had said that the N80 billion would be expended on the completion of ongoing infrastructural projects across the state.