Geregu Power defaults on ₦40bn bond as earnings collapse 88%

The breakdown: Geregu Power (NGX: GEREGU) has defaulted on its ₦40.09 billion Series 1 bond, missing both its eighth semi-annual coupon payment and fourth principal repayment, according to an updated listing status from FMDQ Securities Exchange.

The last comparable corporate bond default was in March 2019, when Municipality Waste Management Contractors Limited missed a ₦4.5 billion payment. The default comes eight months after Senator Abdulaziz Yari's MA'AM Energy bought 77% of Geregu in a $750 million debt-financed takeover, replacing former owner Femi Otedola.

The damage: Profit after tax fell 88% to ₦2.54 billion in H1 2026 from ₦20.27 billion a year earlier. Revenue plunged 78.71% to ₦18.65 billion from ₦87.63 billion. Second-quarter revenue collapsed to just ₦419.1 million, compared with ₦55.87 billion in Q2 2025. The share price has fallen 27.67% since January, closing at ₦825.70 on August 7.

For power investors: Geregu's collapse shows how fast even premium GenCos can hit the wall when turbine maintenance coincides with sector liquidity problems. Corporate defaults are rare in Nigeria's bond market, where borrowers with investment-grade ratings have historically guarded credit standing carefully. Trade receivables stood at ₦200.26 billion at end-Q1, illustrating the systemic payment gridlock across the electricity value chain.

The ripple effect: The default will raise borrowing costs for other power-sector issuers and test appetite for unsecured corporate paper. Geregu traded as one of the NGX's most liquid utility stocks; bondholders now face uncertainty while GCR Ratings has kept Geregu's national scale rating at A(NG) with stable outlook, betting on recovery post-overhaul.

What to look out for

Watch whether Geregu cures the default within any grace period, and how quickly turbine overhauls restore generating capacity. The completion timeline for maintenance work will determine whether this is a temporary cash crunch or structural distress. Also monitor whether FMDQ or SEC Nigeria impose sanctions, and whether other GenCo bonds reprice on contagion fears.