The Federal Government has commenced the process of repaying the N4 trillion debt owed to Power Generation Companies with the launch of a N590 billion first-tranche bond issuance.
Details in the bond term sheet show that 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.
It further showed that the initial tranche, part of a wider N4 trillion NBET Finance Company Plc Bond Programme, is guaranteed by the Federal Government and comprises N300 billion in cash bonds to be issued to the market and N290 billion in non-cash bonds to be directly allotted to GenCos on identical terms.
The bond will have a seven-year tenor on a fixed-rate coupon, redeemed on an amortising basis and paid semi-annually in arrears.”
It will be listed on the Nigerian Exchange and the FMDQ Securities Exchange, and will qualify under the Trustee Investment Act, making it eligible for investment by pension fund administrators, banks, asset managers, insurers and high-net-worth investors.
The issuer also retains the discretion to absorb oversubscription of up to N1.23tn, creating room for additional non-cash bond allocations to GenCos if required.
The term further indicated that pricing will be based on the yield of the seven-year FGN bond plus a spread, and the issuance will be conducted through a book-build process.
The minimum subscription is N5 million, representing 5,000 units at N1,000 each, with additional subscriptions in multiples of N1,000.
“Proceeds from the issuance will be used to settle outstanding liabilities owed to GenCos. The instrument is guaranteed by the full faith and credit of the Federal Government, enjoys CBN liquidity status, meets PenCom compliance requirements, qualifies under the Trustee Investment Act, and will be listed on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange,” it showed.
It further noted that “oversubscription may be absorbed at the discretion of the issuer up to a maximum of N1,230,000,000,000 approved for Phase 1 of this transaction. The issuer reserves the right to increase the size of the non-cash bonds to be issued to the GenCos under any Series or accommodate additional allotments as may be required.”
GenCos have complained about debts owed by the federal government amounting to over N4 billion, which they claim have severely affected their operations.
The bond is fully guaranteed by the Federal Government, enjoys Central Bank liquidity status, and meets PenCom requirements for pension fund investments.
Repayment will be funded primarily through the national budget, with NBET’s recoveries from DisCos serving as a secondary source.
CardinalStone Partners Limited, the lead issuing house and financial adviser for the forthcoming Federal Government-backed Electricity Bond, has invited institutional investors to an investor forum ahead of the planned issuance.
