Lagos Plans N1tn Asset-Backed Securities to Unlock State Assets, Boost Capital Market

The Lagos State Government has announced plans to issue N1 trillion worth of asset-backed securities in the first quarter of next year, aiming to deepen the capital market and unlock value from state-owned assets.

The state’s Commissioner for Finance, Oluyomi Abayomi, made the disclosure at the Investment Banking Awards Dinner of the Association of Issuing Houses of Nigeria in Lagos on Thursday. He said the initiative follows the successful completion of a N200 billion bond issuance, which he described as a major milestone in Lagos’ financing and investment strategy.

“One of the instruments to be introduced early next year is an asset-backed security. We will be securitizing assets currently managed by the state, valued at over N1 trillion,” Abayomi stated.

He added that some local government areas in Lagos would also explore the capital market to issue municipal bonds in the first half of 2026, as part of broader efforts to strengthen subnational financing and maintain an active, attractive market for investors.

According to Abayomi, Lagos’ financing initiatives are designed to boost investor confidence, enhance liquidity, and provide sustainable funding for infrastructure and development projects across the state. He noted that both the state’s N200 billion 10-year bond and its N14.815 billion green bond—the first by any subnational government in Nigeria—were oversubscribed by about 70 per cent. “We came to the market seeking to raise N200 billion and ended up raising N400 billion,” he added.

Commenting on the potential impact of the planned instruments, the Chief Executive Officer of the Nigerian Exchange Limited (NGX), Jude Chiemeka, said the move would expand the market’s product offerings. “This is a positive development as it will help deepen the capital market. Historically dominated by debt and equity instruments, the market had seen limited long-term bond issuance due to high interest rates. With declining inflation and interest rates, corporates now have opportunities to return to the market,” he said.

Chiemeka added that asset-backed securities would help revitalise dormant assets and open new avenues for capital raising, strengthening the market from both trading and issuance perspectives. He also revealed that the NGX has facilitated the raising of N7.3 trillion year-to-date across various asset classes and will continue supporting asset-backed securities and municipal bond issuances.