Lagos State sold Nigeria’s first subnational green bond in November 2025, a ₦14.815bn five-year instrument priced at a 16.00 per cent fixed coupon and maturing in 2030. The offering drew bids of about ₦29.3bn, close to 98 per cent oversubscribed against the amount on offer, in a book-build that priced around 52 basis points above equivalent federal government debt, according to FSD Africa, which provided technical support.
The green tranche was issued alongside a ₦230bn ten-year conventional bond at 16.25 per cent, itself oversubscribed by close to 35 per cent to ₦310bn. Together the two instruments raised ₦244.82bn, the largest issuance in the state’s history, under Lagos’s ₦1tn Debt and Hybrid Instruments Programme. Chapel Hill Denham acted as lead issuing house.
At the signing ceremony in Lagos, Governor Babajide Sanwo-Olu framed the deal as a vote of investor confidence in the state and pointed to green bonds as a route to climate-resilient infrastructure. Proceeds across both bonds are earmarked for transport, housing, healthcare, education, environment and food-security projects, with the green tranche ring-fenced for qualifying sustainable assets and subject to use-of-proceeds reporting.
The issue lands amid a wider push into green finance across Nigeria. Backers including the UK government, through FSD Africa, have positioned the Lagos deal as a template other states could follow, and the strength of the book, drawn from pension funds, asset managers and insurers, points to deep domestic appetite for climate-labelled, naira-denominated infrastructure paper.
Why this matters
Why this matters for energy investors
A heavily oversubscribed, locally priced green bond from a subnational issuer is a useful signal for anyone financing Nigerian energy and infrastructure. It shows real domestic appetite for climate-labelled, naira-denominated paper at tenors long enough to match infrastructure, and at a spread of only around 50 basis points over sovereign debt. Demand, in short, is not the binding constraint; bankable, well-structured projects are.
For developers such as Nova Utilities, that cuts two ways. It widens the pool of capital available for low-carbon generation, from gas-to-power to embedded solar and floating solar, without the currency risk that has burdened dollar borrowing. And it sets a disclosure and use-of-proceeds standard that credible operators can meet, helping separate genuine climate infrastructure from labelling. The market is ready to fund the transition; the work is in originating assets worth funding.