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Rivers Saves
Four Per Cent On Infrastructure Loan
Newsdiaryonline.com Fri Aug 26,2011
The Rivers State government has received the approval of the
state house of assembly to borrow the sum of N100 billion to
help fund its infrastructure projects. According to Governor
Chibuike Amaechi, the bulk of the loan would be used to make
down payments before September 30, for power distribution
projects that will ensure uninterrupted power supply in Rivers
state by 2012. “Whereas we have more than enough generation
capacity, distribution is still insufficient, ‘ the governor
said.
According to a press release signed by Mrs
Ibim Semenitari,
Commissioner of Information and Communications, Rivers
State , the loan which is
being structured by GT bank will come at a cost of 8 per cent
and is to be paid back in three years. Governor Chibuike Amaechi
says, GT bank’s offer is right on time, as it has saved the
state the need to borrow from the capital market at 12 percent.
“We are saving four percent on cost of funds with this
transaction,” Governor Amaechi said. “With this loan from the GT
bank, we will now be seeking to borrow N150 billion from the
capital market, depending on our cash inflows,” he said.
The Rivers state government was planning to issue a shelf
registration for N250 billion at the capital market. A shelf
registration is a procedure that allows corporations or
government (as in this case) file one registration statement
covering several issues over a period of time. With the
“registration on the shelf,” the corporation or entity can go
back to the market with minimal procedure up to the limit
approved, but often times may not necessarily reach that limit.
However with the N100 billion loan, the Rivers State government
will not be taking up the N250 billion bond shelf registration.
Also the state will only draw down N30 billion of this facility
in the first instance. This is in keeping with prudential
guidelines, says Chamberlain Peterside, the State’s commissioner
of Finance. “ The loan facility is a bridge loan that will be
accessed if the need arises but only N30 billion will be require
now given the single obligor limit rules do apply.”
Rivers received a B+ rating from rating giants, Fitch and
Standard and Poors, in 2010. The state’s fundamentals are quite
strong and its financial outlook stable and promising.
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