KEY POINTS
- Geregu Power missed N40bn bond payments.
- The bond carries a 14.5% interest rate.
- FMDQ disclosed the payment default.
Geregu Power Plc has failed to make a scheduled payment on its N40.09 billion Series 1 senior unsecured bond, raising concerns about the company’s ability to meet its debt obligations.
The default involves the eighth interest payment, known as a coupon payment, as well as the fourth repayment of part of the bond’s principal amount.
The development was disclosed in an updated listing status published by FMDQ Securities Exchange. The bond was issued in 2022 as part of Geregu Power’s plans to raise funds for its operations, expansion and other financial needs.
According to the updated information from FMDQ Securities Exchange, Geregu Power defaulted on both the eighth coupon payment and the fourth scheduled principal repayment.
The bond was issued on July 28, 2022, with a seven-year maturity period. It is expected to mature on July 28, 2029.
The bond carries an annual interest rate of 14.5 per cent and was issued under Geregu Power’s N100 billion multi-instrument issuance programme.
The bond is classified as a senior, direct, irrevocable and unsubordinated obligation of the power generation company. This means that it ranks equally with the company’s other unsecured and unsubordinated debts.
Geregu Power raised about N40 billion through the bond to meet its funding needs and support planned expansion projects.
At the time the bond was issued, Global Credit Rating (GCR) gave it a national long-term rating of A(Na), which was the same as the company’s own rating.
The rating reflected Geregu Power’s position as one of Nigeria’s major electricity generation companies and its relatively strong generation capacity.
The company’s ability to generate electricity had supported its earnings and helped strengthen its financial position at the time.
GCR had, however, also identified several risks that could affect the company’s financial performance.
Power sector challenges raise concerns
One of the major concerns identified by GCR was the weak liquidity in Nigeria’s power sector.
The agency also pointed to Geregu Power’s reliance on a relatively concentrated group of customers, meaning that problems affecting some major customers could have a significant effect on the company’s income.
GCR also warned that the company’s debt levels could come under pressure as it pursued its planned expansion projects.
The agency placed the outlook on the bond at “Evolving”, reflecting uncertainty around Geregu Power’s fundraising plans, the execution of its projects and the expected improvement in its revenue.
GCR had warned that delays in the company’s planned projects could worsen its debt position and increase refinancing risks.
The rating agency also identified aggressive dividend payments as another potential concern, particularly while the company was still investing heavily in expansion.
Lower-than-expected earnings caused by production losses were also listed as a possible factor that could put pressure on the company’s credit position.
These risks are important because a company facing weaker earnings while carrying significant debt may find it more difficult to meet scheduled interest and principal payments.
The latest bond default comes after Geregu Power’s board approved a proposed dividend of N9 per share for shareholders earlier in the year.
The company’s dividend plans come at a time when it is also dealing with its debt obligations and expansion needs.
The development is therefore likely to draw attention to how the company balances returns to shareholders with its financing and investment commitments.
The development also comes about eight months after businessman Femi Otedola, the company’s former chairman, sold his majority stake in Geregu Power.
Otedola sold his shares in December 2025 in a transaction valued at about N1.088 trillion.
Geregu Power remains an important player in Nigeria’s electricity generation sector, and its financial position is closely linked to the wider challenges facing the country’s power industry.
The bond payment default adds another financial concern to an industry already dealing with issues such as limited liquidity, payment challenges, infrastructure needs and the high cost of maintaining and expanding power generation facilities.
