Kaduna State - SWEARING-IN OF MUKHTAR RAMALAN YERO AS GOVERNOR OF KADUNA STATE

[KadunaState]

The ratings reflect prospects of stable operating performance, combined with strong debt and debt service coverage. The ratings also take into account limited budget predictability and weak internally generated revenues (IGR).

Kaduna State continues to report sound budgetary performance. Operating surplus increased 30% to about NGN22bn in 2009 as overheads fell 4% and wage increases were postponed due to expected lower oil-related revenue, which account for 70% of annual proceeds.

Consequently, debt and debt service coverage ratios should remain strong. Fitch expects the former to be below two years of the current balance, while the operating balance should cover interest and principal payment - the latter paid into a sinking fund - by 3x.

Kaduna's commitment to bolstering the agricultural sector, and building schools, power plants, hospitals, roads and railways, translates into growing capital spending. Fitch expects investment to total around NGN30bn by 2011, 2x the levels in 2005.

The decision to deploy NGN7bn of VAT proceeds entirely for capital projects should reduce its borrowing requirements by up to NGN10bn in 2010 and 2011, when Kaduna may also issue second tranche of its NGN15bn bond.



Via: Kaduna State Government - Official Press Release