Lagos State Government is borrowing money to continue to build roads, schools, bridges and hospitals in pursuit of its Mega City ambition.

On Monday, the state raised 85.14 billion naira in 7- and 10-year bonds to fund the infrastructure and environmental projects.

The bond consists of 46.37 billion naira that the government will pay back over a period of 7 years at a 16.75% interest rate.

There is also another 38.77 billion naira to be paid back in 10 years with 17.25% interest.

Lagos State finance commissioner, Akinyemi Ashade said the issue is the third tranche of a 500-billion-naira debt programme approved by Lagos House of Assembly last year and was sold through book building.

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Lagos State sold 60-billion-naira worth of 5-year bonds last year, the first tranche of the debt programme planned to be issued over the next two to five years.

"We value the reputation we have earned as the most responsible issuer in the Nigerian capital markets and thank everyone who has worked with us to deliver a successful outcome," Ashade said.

Stock brokers said the state paid higher interest than the inflation rate on the bond in a bid to lure investors into buying the debt.