Geregu Power bond default rattles investors as earnings plunge 88%

By Udeme Akpan, Energy Editor

Investors in Geregu Power Plc are facing renewed concerns over the company’s financial position after it defaulted on its N40.09 billion Series 1 Senior Unsecured Bond, missing both its eighth semi-annual coupon payment and scheduled fourth principal repayment.

The default was disclosed in an updated listing status published by FMDQ Securities Exchange, which classified the bond as being in “credit default” over the eighth coupon payment and fourth bullet principal repayment.

The development comes amid a sharp deterioration in Geregu Power’s revenue, profitability and operating cash flows, raising concerns over its immediate liquidity and debt-servicing capacity.

Issued on July 28, 2022, under the company’s N100 billion debt issuance programme, the seven-year bond carries a fixed interest rate of 14.50 per cent, with semi-annual coupon payments and scheduled principal repayments until its July 28, 2029 maturity.

The default therefore occurred midway through the bond’s life, rather than at maturity.

Geregu Power’s financial performance deteriorated sharply in the first half of 2026, with profit after tax falling 88 per cent to N2.54 billion from N20.27 billion in the corresponding period of 2025.

Revenue plunged 78.71 per cent to N18.65 billion from N87.63 billion, while net profit margin contracted to 13.34 per cent from 23.23 per cent.

The decline was particularly severe in the second quarter, when revenue collapsed to N419.1 million from N55.87 billion in Q2 2025.

The performance was also significantly below the company’s earlier projections. Geregu Power had forecast Q1 2026 revenue of N57.11 billion and profit after tax of N12.02 billion, compared with N31.75 billion and N10.43 billion respectively in Q1 2025.

Geregu Power has attributed the decline in generation and financial performance to its N61.47 billion major turbine maintenance programme.

The overhaul is intended to improve the long-term reliability and availability of the generating plant. However, the temporary withdrawal of generating capacity has reduced electricity output, billable energy and cash generation.

The maintenance programme has consequently created significant near-term pressure on the company’s ability to generate sufficient cash to meet its financial obligations.

The company received some balance-sheet support from N16.12 billion in reversals of financial asset impairment charges, while total liabilities declined to N239.33 billion.

However, the bond default indicates that liquidity pressures remain significant.

Despite the deterioration, GCR Ratings affirmed Geregu Power’s national scale long-term issuer rating at ‘A(NG)’ with a Stable outlook.

The ratings agency expects the company’s performance to recover after completion of the turbine overhaul, with improved generation and revenue as available capacity returns to the national grid.

This suggests that while GCR remains confident in Geregu Power’s long-term business fundamentals, the bond default has exposed a serious short-term cash-flow challenge.

The deterioration has also been reflected in the company’s stock performance.

Geregu Power’s share price has fallen 27.67 per cent since the beginning of 2026, closing at N825.70 on August 7, compared with N1,141.50 at the start of the year.

The decline indicates growing investor caution over the company’s earnings outlook.

Geregu Power acquired generating assets in Ajaokuta in 2013 and was listed on the Nigerian Exchange four years ago amid strong investor expectations of earnings growth in Nigeria’s power sector.

The latest default now leaves bondholders watching for the company’s plans to cure the missed payments, while equity investors will be monitoring the completion of the turbine overhaul and the restoration of generating capacity.

The key question is whether the current cash-flow strain is temporary and linked to the maintenance programme, or signals a deeper deterioration in Geregu Power’s ability to service its obligations.

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