Ogun seeks N30bn loan from private investors to fund cargo airport

By Cynthia Ezekwe

Ogun State government is seeking to raise N30 billion in new debt capital from private investors to fund the state’s agric-based cargo airport.

The government has opened an application list for private investors to subscribe to a N30 billion five-year bond under a special purpose vehicle known as BOFT Infrastructure SPV Limited, according to available documents.

The N30 billion bond has a tenor of five years with prospective coupon range of between 16.00 percent and 16.50 percent. Minimum subscription is N10 million.

The bond is backed by an irrevocable standing payment order (ISPO) on Ogun State’s statutory allocation account with the federal government. This means that funding for the bond repayment and coupon will automatically be deducted from the state’s federal allocation.

The bond issue is undertaken through a book building method—a selective issuance process under which preliminary bids by qualified investors are aggregated to determine the final coupon and other issuance details.

According to the state government, the net proceeds of the bond will be used to fund the Gateway Agro-Cargo International Airport and other projects in the state.

As an avenue to carry out the project, the government incorporated BOFT Infrastructure SPV Limited as a special purpose vehicle to raise capital through private company bond issuance for the completion of the airport project.

The government said the project, once completed, would serve as a hub for transit of goods locally and internationally and would be integrated into the Special Agric Processing Zone and Logistics Hub at Sagamu Interchange to serve industries and businesses.

Ogun state, the guarantor to the project, is currently rated Bbb+ by Agusto & Co while the BOFT Infrastructure SPV Limited Bond has been assigned an A rating by Agusto & Co.