Lagos State plans to issue 60 billion naira this year out of a 500 billion naira bond programme to be issued over the next three to five years approved by its parliament, its governor said on Friday.
Lagos state had in April agreed to pay off holders of an outstanding 167.5 billion naira bond before maturity to cut its interest payments after a plunge in oil prices slashed government revenues.
The new bond which the state plans to issue will be channelled to infrastructure projects, Governor Akinwumi Ambode said.
"The 60 billion naira bond approved for the current year would be used to accelerate the aggressive infrastructure development ongoing in the state," he said in a statement.
Lagos state is home to the commercial hub of Africa's biggest economy and most populous nation, a sprawling city of more than 21 million people which badly needs infrastructure upgrades.
Lagos is the first state to announce a bond issue since the country slipped into recession in the second quarter. It is also rare among Nigeria's 36 states in generating around 70 percent of its revenue internally from taxes.
Most other states depend on their share of federal oil revenues.
"The financial arrangement of the state is such that bond programmes embarked upon are easily repayable through internally generated revenue," Ambode said.