Geregu Power Defaults on N40.09bn Bond Payments as Investors Raise Liquidity Concerns
Geregu Power Plc has missed payments on its N40.09 billion Series 1 Senior Unsecured Bond, raising fresh concerns among investors about the power company’s liquidity and ability to meet its debt obligations.
The default involves both the eighth semi-annual coupon payment and the scheduled fourth principal repayment, according to the latest listing status published by FMDQ Securities Exchange.
The development represents a significant escalation in Geregu Power’s debt-servicing challenges, coming amid a sharp decline in the company’s revenue, profitability and operating cash flow.
The seven-year bond was issued on July 28, 2022, at a fixed interest rate of 14.50% under Geregu Power’s N100 billion debt issuance programme. It was structured to provide semi-annual coupon payments alongside principal repayments, with final maturity scheduled for July 28, 2029.
The missed payments therefore occurred midway through the bond’s tenure rather than at maturity, increasing scrutiny over the company’s short-term financial position.
Sharp deterioration in earnings
FMDQ Securities Exchange has classified the Series 1 bond as being in “credit default in the 8th coupon payment and 4th bullet principal repayment.”
The development follows a major deterioration in Geregu Power’s financial performance during the first half of 2026.
For the six months ended June 30, 2026, the company’s profit after tax fell by 88% to N2.54 billion, compared with N20.27 billion recorded during the corresponding period of 2025.
Revenue also declined by 78.71%, falling from N87.63 billion in the first half of 2025 to N18.65 billion.
The company’s net profit margin dropped from 23.23% to 13.34%.
The situation became even more severe in the second quarter, when Geregu Power recorded only N419.1 million in revenue, compared with N55.87 billion in the same quarter of 2025.
The latest figures are a sharp reversal from the company’s earlier expectations for 2026. Earlier in the year, Geregu Power had projected first-quarter revenue of N57.11 billion and profit after tax of N12.02 billion.
Actual performance has since fallen substantially below those projections.
Turbine maintenance weighs on cash flow
Geregu Power has attributed the decline in operations to a major turbine maintenance programme estimated at N61.47 billion.
The maintenance is intended to improve the long-term reliability and availability of the company’s generating assets. However, the temporary reduction in generating capacity has significantly affected electricity output, revenue and cash generation.
With less capacity available for commercial generation, the company has faced weaker operating cash flows at a time when it still has significant debt-servicing obligations.
The combination of reduced revenue and heavy maintenance expenditure has therefore contributed to the pressure surrounding the bond payments.
Despite the difficulties, the company recorded some balance-sheet support from financial asset impairment reversals amounting to N16.12 billion.
Total liabilities also declined to N239.33 billion during the period.
However, those factors have not prevented concerns over the company’s immediate debt-servicing capacity.
Ratings agency maintains confidence in recovery
GCR Ratings had previously maintained confidence in Geregu Power’s longer-term prospects.
The ratings agency affirmed the company’s national scale long-term issuer rating at ‘A(NG)’ with a Stable outlook, citing expectations that power generation and revenue would recover after the completion of the turbine overhaul programme.
The assessment suggests that the company’s current difficulties could be temporary if the maintenance programme is successfully completed and the plant returns to full operational capacity.
However, the bond default indicates that the company is facing a more immediate cash-flow challenge than investors may have previously anticipated.
Investors react to deterioration
Geregu Power’s share price has also come under pressure.
The stock has fallen 27.67% since the beginning of 2026, closing at N825.70 on Friday, August 7, compared with N1,141.50 at the start of the year.
The decline reflects growing investor concerns over the company’s earnings outlook and the effect of the prolonged maintenance programme on its financial position.
For bondholders, attention will now focus on how quickly the company can resolve the missed payments and whether it can provide a clear timetable for restoring its generating capacity.
What happens next?
Geregu Power acquired generating assets in Ajaokuta in 2013 and has since grown into one of Nigeria’s notable power generation companies.
The company was listed on the Nigerian Exchange four years ago, attracting investor interest because of its position in Nigeria’s power sector and the country’s persistent electricity demand.
The current bond default, however, presents a new challenge for both debt and equity investors.
Bondholders are likely to monitor whether the company cures the default within any applicable grace period and whether management provides clearer details on its repayment plans.
Equity investors, meanwhile, will be watching for signs that the turbine maintenance programme is nearing completion and that generation, revenue and profitability are beginning to recover.
The key question for the market is whether Geregu Power’s current financial strain is a temporary consequence of its large-scale maintenance programme or a sign of deeper liquidity problems.
For now, the combination of missed bond payments, an 88% decline in half-year profit and a 27.67% fall in the share price has placed the company under significantly greater scrutiny.
