Bauchi State Government Holds an Extraordinary meeting with Bondholders in Lagos

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An Extraordinary Bondholders Meeting was held to restructure the N15,000,000,000 15.5% series 1 fixed rate bonds due 2021 under the N30 Billion medium-term note program.

The purpose of the meeting is to seek the support of the bondholders to restructure the terms of the Bond by increasing the tenor to 5 years and adjusting the coupon to a competitive current market rate.

It would be recalled that in 2014, the previous government issued an N15 billion 7 year bond from the capital market for the completion of specialist Hospital and ATB international Airport. Recall, the drop in crude oil prices from $95 per barrel in September 2014 to circa $59 per barrel currently and decline in Nigeria’s oil production, Federal allocation to all tiers of Government has declined by as much as 62.2%. Considering the fact that this allocation makes up the bulk of the revenue of most states, the drastic reduction has put a significant strain on the finances and cash flow of many Nigerian states, Bauchi State inclusive.

Accordingly, as part of the strategy towards ensuring that government delivers the much-needed services to the good people of Bauchi State and continually meet its financing obligations, the cooperation of the bondholders was sought to support the State’s intention to restructure the Bond for better cash flow management.

The State proposed to amend certain provisions of the Terms of the Trust Deed, especially the tenor of the Bonds. The tenor of the Bonds is to be extended by five (5) years resulting to a modification in the maturity of the Bonds from 08 December 2021 to 08 December 2026. This amendment will have reductive implication on the monthly Debt service.
The reduction of the cash flow will enhance the states ability to effectively pay workers salaries and implementation of capital projects across the State.

Present at the meeting from the Bauchi State Government were His Excellency Governor M.A Abubakar; the Permanent Secretary Ministry of Finance, Hashimu Abubakar Dori; the General and Permanent Secretary, Ministry of Justice Haruna D. Mohammed; and Director General, Debt Management Office, Bauchi, Nura Danmadami.

Professional parties present were; Planet Capital Ltd., United Capital Plc, Boston Advisory Ltd., ARM Trustees Ltd., FBN Trustees Ltd., STL Trustees Ltd., United Capital Trustees Ltd., UTL Trustees Management Services Ltd., PAC Registrars Ltd., George Ikoli & Okagbue.