AMAECHI: WHY RIVERS IS ISSUING N250BN BOND
Rivers State Governor, Chibuike Rotimi Amaechi has again explained why his administration plans to issue bond at the capital market for funding major developmental projects.
A statement by the spokesman to the state governor, Mr. David Iyofor stated that the bond would be tied to funding specific developmental projects.
The projects, he said, include the Greater Port Harcourt City, the Port Harcourt Monorail project, the new Rivers State University of Science and Technology Phase 1, [email protected] (an entertainment complex), the Port Harcourt Ring Road (that would connect the old city and Greater Port Harcourt) and a new M-10 Highway (a beltway that would link the Port Harcourt International Airport to the Onne Sea port).
Iyofor explained that such audacious gigantic projects would need immediate and massive funds injection to complete them.
Hence Rivers State plans to approach the capital market in October 2011 to raise these funds.
He added that already the state House of Assembly had given the nod for the governor to go ahead and obtain the bond as such projects could not be accomplished by sheer reliance on Federal Allocation and Internally Generated Revenue.
Explaining further the details of the bond, Rivers State Commissioner for Finance, Dr. Chamberlain Peterside said: 'These long term capital projects that are capable of catalyzing the industrialization and transformation of Rivers State require massive financial investment that can only be obtained from the capital market.
'The proposed size of the first tranche of the bond will be about N100 billion with five years tenor, whereas the total bond programme of N250 billion is envisaged over the next several months,' Peterside said.
Rivers State remains very buoyant financially with sizeable revenue accruing from both the Federation Account and IGR. The State had set a target of earning at least half of its total revenue from IGR over the next one to two years.
According to Peterside, 'whilst energy prices remain relatively high on the world market in an atmosphere of low to moderate interest rate, Rivers State would benefit from a bond issue at this stage through leveraging its high income potential and favourable credit rating, coupled with a debt portfolio that is currently low at less than N30 billion.
'The economic indicators of the state, including annual Gross Domestic Product of about N30 trillion compared to its debt stock are positive attributes that Rivers State can ride on to raise additional funds to finance its long term development agenda and fast track social and economic growth,' he said.