Investors worry as Geregu Power defaults on bond payments

Geregu Power Plc has defaulted on a N40.09 billion Series 1 Senior Unsecured Bond, failing to meet two significant obligations, according to FMDQ Securities Exchange. This marks a growing issue in debt servicing for the major Nigerian power generation firm amid a collapsing operational cash flow and deteriorating earnings. The 7-year bond, issued in July 2022, had coupon distributions every six months and an amortising principal repayment schedule leading to its July 2029 maturity.

The missed payment is partway through the bond's lifespan, presenting concern over the company's immediate financial health. Further market concerns were spurred by Geregu Power's H1 2026 performance, which fell far below expectations, both their own projections and last year's actuals. The company cited a N61.47 billion turbine maintenance program as the cause of its operational slow down, leading to significant margin reductions and cash generation issues.

The market's response reflects the ongoing difficulty in assessing the balance between Geregu Power's short-term challenges and its potential long-term recovery. Since the beginning of the year, Geregu's share price has plummeted 27.67%, closing at N825.70, down from its N1,141.50 price at the start of the year, placing it 129th among listed Nigerian firms.

Geregu Power's acquisition of Ajaokuta's power generating plants, which utilize gas turbines for sustainable energy, has been a key part of its strategy, but the current turmoil highlights the challenges of balancing immediate financial strain with future growth expectations.