Geregu Power bond default rattles investors as earnings plunge 88%

Investors in Geregu Power Plc face mounting concerns following the company's default on its N40.09 billion Series 1 Senior Unsecured Bond. The power firm missed both its eighth semi-annual coupon payment and its scheduled fourth principal repayment, triggering a "credit default" classification by FMDQ Securities Exchange.

This default occurs amidst a significant downturn in Geregu Power's financial health. Profit after tax plummeted by 88% to N2.54 billion in the first half of 2026, compared to N20.27 billion in the same period of 2025. Revenue saw a drastic 78.71% drop to N18.65 billion from N87.63 billion, with the net profit margin contracting. The second quarter was particularly severe, with revenue collapsing to N419.1 million from N55.87 billion in Q2 2025.

Geregu Power attributes this sharp decline to a N61.47 billion major turbine maintenance program. While intended to enhance long-term reliability, the temporary reduction in generating capacity has directly impacted electricity output, billable energy, and cash generation. This has created significant near-term pressure on the company's ability to meet its financial obligations, leading to the bond default.

Despite these challenges, GCR Ratings affirmed Geregu Power's national scale long-term issuer rating at 'A(NG)' with a Stable outlook. The agency anticipates a performance recovery after the turbine overhaul is completed and generating capacity returns to the national grid. This suggests confidence in the company's long-term fundamentals, even as immediate liquidity pressures remain evident.