The Lagos State Government has opened its Series 5 Fixed Rate Bond offer to raise up to ₦200 billion under its ₦1 trillion Debt and Hybrid Instruments Issuance Programme. The offer opened on Friday, October 9, 2026, and is scheduled to close on Friday, October 16, 2026. It will be priced through book building, with indicative coupon guidance of 16.50%–16.75% per annum.
Proceeds will finance priority infrastructure projects, including the Blue Line rail extension, hospital construction and the Omu Creek Road and bridge project.
The bond carries a 10-year tenor with semi-annual principal repayments following a 36-month moratorium. Fixed-rate coupon payments are payable semi-annually. The issuer has Aa- rating from Agusto & Co. and AA from GCR, with an indicative issue rating of Aa with a stable outlook from Agusto & Co. The minimum subscription is ₦5 million, representing 5,000 units at ₦1,000 each, with additional subscriptions in multiples of ₦1,000.
Lagos is Nigeria’s commercial and financial hub, with a diversified economy spanning trade, financial services, telecommunications, manufacturing, transportation and real estate. Agusto’s financial summary shows that Lagos generated ₦1.85 trillion in internally generated revenue (IGR) in 2025, up 19.7% from ₦1.55 trillion in 2024. IGR accounted for 69.4% of revenue excluding grants in 2025.
Kanyi Daily reports that the proposed allocation directs ₦122.16 billion, or 61.1% of gross proceeds, towards the Blue Line rail development. The work includes track and bridge construction on the Mile 2–Trade Fair section, stations at Festac, Alakija and Trade Fair, and associated fare collection and information systems.
Another ₦48.87 billion is earmarked for health projects, including the New Massey Street Children’s Hospital and the 280-bed Ojo General Hospital. The Omu Creek project will receive about ₦24.43 billion for a 3.915-kilometre road incorporating a 600-metre bridge.
At the minimum investment of ₦5 million, the indicative coupon range of 16.50%–16.75% would produce annual gross interest of ₦825,000–₦837,500 while the full principal remains outstanding. Using the midpoint of 16.625%, this translates to ₦831,250 annually, split into two semi-annual payments of ₦415,625, before applicable taxes.
Lagos’ revenue growth and cash generation provide support for the issuance. The audited accounts show total operating revenue, including grants, increased by 15.5% to ₦2.68 trillion in 2025. Internally generated revenue rose 19.7% to ₦1.85 trillion, accounting for about 69% of revenue excluding grants. Net cash from operating activities increased by 7% to ₦1.39 trillion, while year-end cash and cash equivalents rose 27.1% to ₦540.60 billion.
The proposed coupon does not offer a premium over the latest comparable FGN auction benchmark. At the September 14 auction, the 10-year FGN September 2036 bond cleared at 16.79%, compared with Lagos’ indicative range of 16.50%–16.75%. The Lagos offer is therefore 4–29 basis points below that benchmark.
The main concern is pricing. Lagos’ indicative coupon of 16.50%–16.75% is below the 16.79% yield recorded for the comparable 10-year FGN bond at the September auction, offering no additional yield to compensate investors for taking Lagos State’s credit risk.
The five-year call option favours the issuer. If interest rates fall, Lagos can redeem the bond at par after five years and potentially refinance at a lower cost. Bondholders would lose the remaining scheduled coupon income and may have to reinvest their returned principal at lower yields.
Lagos’ public debt increased by 9.5% to ₦3.07 trillion at December 2025, with external loans accounting for ₦1.91 trillion, or 62%. If the naira weakens, the naira value of these foreign-currency obligations and the cost of servicing them would rise.
