The Federal Government has commenced the long-awaited settlement of its multi-trillion-naira debt to power generation companies (GenCos) with the launch of a N590bn first-tranche bond issuance, marking a major step toward resolving the liquidity crisis crippling Nigeria’s electricity market.
The initial tranche—part of the N4tn NBET Finance Company Plc Bond Programme—is backed by a full sovereign guarantee. It consists of N300bn in cash bonds to be issued to investors and N290bn in non-cash bonds to be allotted directly to GenCos under identical terms.
According to documents seen by The PUNCH, the Series 1 bond will be issued between November and December 2025, with CardinalStone Partners Limited serving as the lead issuing house and financial adviser.
The bond carries a seven-year tenor, a fixed coupon rate, will be amortised over its lifespan, and features semi-annual interest payments. It will be listed on both the Nigerian Exchange Limited and the FMDQ Securities Exchange, and qualifies under the Trustee Investment Act—making it eligible for pension funds, banks, insurers, and asset managers.
The term sheet shows that pricing will be based on the yield of a seven-year FGN bond plus a spread, with a minimum subscription of N5 million. The issuer also retains the right to absorb up to N1.23tn in oversubscription, creating room for additional non-cash bond allocations to GenCos if required.
The Federal Government plans to deploy proceeds from the issuance to offset long-standing debts that have pushed GenCos to the brink. The companies have repeatedly warned that the N4tn debt—projected to hit N6tn by year-end—has weakened their ability to pay gas suppliers, maintain turbines, and sustain generation output, contributing to recurrent grid collapses.
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The bond programme forms a central component of President Bola Tinubu’s plan to restructure the power sector’s financial backbone after years of under-remittance by electricity distribution companies (DisCos), which left the Nigerian Bulk Electricity Trading Plc (NBET) unable to settle GenCos’ invoices.
Repayment of the bond will be financed primarily through the federal budget, with NBET’s recoveries from DisCos serving as a secondary source.
Ahead of the issuance, CardinalStone invited banks, pension fund administrators, asset managers, insurance firms, and other institutional investors to an investor forum scheduled for December 10, 2025. According to the firm, the N590bn Series 1 bond—issuable at a 16.25% to 16.75% coupon range—is designed to support electricity market reforms and help stabilise generation.
“The bond carries a full sovereign guarantee and is structured to deliver direct impact to the power sector,” the advisory firm said in a notice to investors, adding that it will also benefit from a PenCom waiver, though CBN approval for repo and collateral eligibility is still pending.
Sector insiders say GenCos have been invited to a meeting on Wednesday, which is expected to provide clarity on the bond structure and repayment framework. However, one senior official familiar with the matter noted that the issuance has raised “more questions than answers” among operators.
The N590bn issuance is the first step in what will be the largest debt clean-up in Nigeria’s electricity market since privatisation, as the government works to restore financial stability, rebuild investor confidence, and boost power supply nationwide.
