FG Launches N590bn Bond to Tackle N4tn GenCos Debt Crisis

FG Launches N590bn Bond to Tackle N4tn GenCos Debt Crisis

The Federal Government has rolled out a N590 billion first-tranche bond issuance as part of a broader N4 trillion programme by NBET Finance Company Plc, aimed at clearing a staggering N4 trillion in outstanding debts owed to power generation companies (GenCos).Announced on Monday, the initiative includes N300 billion in cash bonds offered to the open market and N290 billion in non-cash bonds directly allocated to GenCos under matching terms. The bonds carry a seven-year maturity, fixed-rate coupons with semi-annual interest payments, and amortising redemptions, with issuance slated between November and December 2025.CardinalStone Partners Limited is leading as the issuing house and financial adviser. The instruments will list on the Nigerian Exchange and FMDQ Securities Exchange, qualifying for investments by pension funds, banks, insurers, and high-net-worth individuals under the Trustee Investment Act. They also enjoy Central Bank of Nigeria liquidity status and meet PenCom compliance standards.Proceeds from the bonds will directly settle verified liabilities to GenCos, with repayments sourced primarily from the national budget and backed secondarily by recoveries from Distribution Companies (DisCos) via the Nigerian Bulk Electricity Trading Plc (NBET).The move addresses a crippling liquidity crunch in Nigeria's power sector, where NBET's payment shortfalls stemming from DisCos' under-remittances have ballooned debts to N4 trillion, with projections hitting N6 trillion by year-end. This has strangled GenCos' operations, weakened gas supply deals, slashed plant capacities, triggered frequent grid collapses, and left millions enduring erratic electricity supply."This bond issuance is a pivotal step by President Bola Tinubu's administration to inject stability into the power sector and unlock its full potential," sources close to the Debt Management Office (DMO) noted. The programme could absorb up to N1.23 trillion in oversubscription for extra non-cash allotments to GenCos, offering a lifeline to sustain generation amid rising demand

Source: FG Launches N590bn Bond to Tackle N4tn GenCos Debt Crisis

 - NigerianEye

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