Imo bond over-subscribed ­— Commissioner

By JOY EMEH

There are indications that the initial N18.5 billion bond offer by the Imo State government in the capital market may have been over-subscribed.

Imo state Finance Commissioner, Mr. George Irechukwu, gave the hint in Lagos at the weekend when he told journalists that investors accepted the bond offer beyond their expectation.

Supported by Imo state Commissioner for Information and Strategy, Dr. Amanze Obi and Chief Executive Officer of Oguta Wonder Lake Resort and Conference Centre, Mr. Chukwumeka Irechukwu explained that the state took some two years to plan on the areas to invest the money gotten from the bond offer.

According to him, the choice of Oguta Wonder Lake project was carefully thought out as Imo is strategically located to attract tourists.

He expressed delight that the project which would consume substantial volume of the N18.5 billion first trench of the N40 billion three-part bond offer, would go a long way in helping Governor Ikedi Ohakim to realize some of his electoral promises including job creation and empowerment.

Irechukwu dispelled fears that the bond would add greater financial burden on other administrations coming after Ohakim, insisting that the repayment was carefully packaged to avoid any such burden.

On the fear that another administration may decide to revoke the irrevocable payment standing order on the bond repayment, Dr. Obi noted that government was a continuum.

He also explained that the use of the fund would be noticeable by anybody to convince even its current critics that the fund was prudently and profitably deployed.

He said that the minimum subscription of the bond was N10 million and multiples of N1 million thereafter, adding that the bond and the stat have A+ and BB+ ratings respectively from Augusto & Co.

The commissioner said that the bond would be listed on the Nigeria Stock Exchange, revealing that necessary approvals have been obtained.

Irechukwu said that investors would benefit from the bond in many ways. One of the benefits, he said, is that the bond provides a fixed income for the investor, which is payable twice a year.

Other benefits to the investors, he said, include: The bond is exempted from tax; it is secured by an irrevocable standing payment order on the state statutory allocation; it is listed on the Nigerian Stock Exchange for trading and it has an investment grade rating of A+.

Apart from facilitating the financing projects in the state, the commissioner said that the bond imposes enormous financial discipline on the state government, adding: "The rating and regular market disclosure required from Imo State demonstrate the state’s willingness and readiness to comply with the capital market rules."

The bond has a seven-year maturation period and would also be used to build roads and other public infrastructure that would have an economic rate attached to them. The bond subscription was carried out in June this year.