Lagos State Bond Update

O

Olatunde Akanbi

Member
Invest ₦5 Million, Earn About ₦415,625 Every Six Months? Lagos State Opens ₦200 Billion Bond Offer

What if you could invest in a government bond that pays you interest twice a year?

The Lagos State Government has opened a new bond offer of up to ₦200 billion to finance infrastructure projects, including the Blue Line rail extension, hospitals and road construction.

According to Nairametrics, the offer opened on October 9 and is scheduled to close on October 16, 2026.

Here is what investors should know.

1. How Much Can You Earn?

The proposed annual interest rate, known as the coupon, is between 16.50% and 16.75%.

With a ₦5 million investment, your indicative returns would be:

- At 16.50%: ₦825,000 yearly.
- At 16.75%: ₦837,500 yearly.

That translates to approximately ₦412,500–₦418,750 every six months, before applicable taxes and other costs.

At the midpoint rate of 16.625%, you would receive approximately ₦415,625 every six months while the full ₦5 million principal remains outstanding.

2. How Long Will Your Money Be Invested?

The bond has a stated tenure of 10 years, with principal repayments scheduled to begin after a three-year moratorium.

Repayments are then spread across the remaining seven years.

This means your principal is not necessarily returned in one lump sum at the end. As the outstanding principal reduces, your interest payments will also decline.

3. What Is The Minimum Investment?

The minimum subscription is ₦5 million, with additional investments permitted in multiples of ₦1,000, according to the published offer terms.

The final interest rate will be determined through book building, so the indicative rate is not yet guaranteed.

4. What Are The Risks?

Before investing, consider these important factors:

- Tenure: Your money may be committed for a long period.
- Interest rates: Market rates may rise after you invest, making your existing bond less attractive.
- Early redemption: Lagos State may redeem the bond at par after five years, subject to the offer's conditions. This could shorten your income period.
- Credit risk: Government bonds are not entirely risk-free; assess the issuer's ability to meet its obligations.
- Taxes and fees: Your actual net return may be lower than the advertised coupon.

5. Is It Better Than Treasury Bills?

Not automatically.

Treasury bills have shorter tenures, while this Lagos bond offers a longer-term income stream with scheduled principal repayments.

Compare the final coupon with current FGN bond yields, alongside taxes, liquidity and repayment terms, before deciding.

The Bottom Line

A government bond can help investors plan for regular income, but the advertised interest rate is only one part of the decision. Understand the repayment structure and the risks before committing your money.

Would you invest ₦5 million in this Lagos State bond for long-term income, or would you prefer Treasury bills and other shorter-term investments?



#LagosStateBond #FixedIncome #TreasuryBills #InvestmentEducation
 
The risks involved are even higher with state bonds. The conditions for repayment of principal and interest are not consistent. The rate of tax deductibles are not stated. Naira depreciation is another fear...stability of naira is not guaranteed,though, it appears stable for the moment.
 
I prefer Nigerian Treasury bills (T-bills) to Lagos state bonds because it's backed by the federal government of Nigeria, making it generally more secure than state bonds.
No risk of default in Treasury Bill compared to state bonds issued by state governments, especially Nigerian states that thrive on extortions and lack of accountability. There's more stringent regulatory oversight in federal government Treasury bills compared to state bonds.
The duration of 10 years is too long especially with instability of Naira. Treasury bills have shorter durations and the interest accrued is paid upfront if needed.
The rate of the 10 year bonds is not encouraging. 16% is too low for such long tenure.
Cheers.🍻 👏 ✌️ 🥂 🍻 👏 ✌️
 
Giwa Ihesha said:
I prefer Nigerian Treasury bills (T-bills) to Lagos state bonds because it's backed by the federal government of Nigeria, making it generally more secure than state bonds.
No risk of default in Treasury Bill compared to state bonds issued by state governments, especially Nigerian states that thrive on extortions and lack of accountability. There's more stringent regulatory oversight in federal government Treasury bills compared to state bonds.
The duration of 10 years is too long especially with instability of Naira. Treasury bills have shorter durations and the interest accrued is paid upfront if needed.
The rate of the 10 year bonds is not encouraging. 16% is too low for such long tenure.
Cheers.🍻 👏 ✌️ 🥂 🍻 👏 ✌️
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investing in both is better than putting all your eggs on a basket
 
Onwura Chioma said:
investing in both is better than putting all your eggs on a basket
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I sincerely agree that diversification is ok, but state governments in Nigeria occasionally face challenges or delays in raising funds, servicing bonds due to strict regulatory prerequisites, high financial dependence on federal allocations, legislative bottlenecks, or temporary processing and system glitches. I personally don't trust state issued bonds in Nigeria.

I know Lagos is financially capable of delivering on its bonds. My main beef with this particular bond includes: Low rate to duration, instability of the naira considering the long duration etc. What if Naira exchange for 100k to $1 in 10 years? 😄 🤣 😂 😆 😄 🤣
 
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