11 states to pay 14.83% interest on bond

The Debt Management Office in Monday said that the 11 state governments whose commercial debts were recently restructured into bonds would pay an interest rate of 14.83 per cent of the value.

The Director-General, DMO, Dr. Abraham Nwankwo, who stated this in Abuja, said the 14.83 per cent would be paid by the 11 states whose debt had already been restructured in the first phase of the exercise.

The restructuring, according to him, has been effected, noting that with the arrangement, the bond will mature on July 18, 2034.

The first 11 states that got their debts to commercial banks restructured are Osun, N88.6bn; Delta, N69.8bn; Ogun, N55.4bn; Imo, N37.1bn; Ekiti, N18.8bn; Kwara, N15.6bn; and Edo, N11.9bn.

Others are Benue, N10.9bn; Oyo, N9.1bn; Bauchi, N6.5bn and Kogi, N0.81bn.

Nwankwo said that the impact of the debt management operations would imply a drop in the monthly debt service burden by a minimum of 55 per cent and a maximum of 97 per cent among the 11 states.

Similarly, the interest rate savings for the 11 states would now range from three per cent to nine per cent per annum.

He said, “The debt restructuring operation and their total loans to the 11 states, which were restructured, amounted to N322.78bn.

“The restructuring was effected using a reopening of the FGN-Bond issued on July 18, 2014 and maturing on July 18, 2034.

“The pricing was based on the yield to date of the bond at a 30-day average, resulting in a transaction yield of 14.83 per cent.”

He explained that the debt restructuring exercise was open to all the 36 states of the federation and the Federal Capital Territory but added that the second phase of the commercial debt restructuring exercise would commence when the remaining 11 states must have completed the reconciliation of their loans with their respective banks.