Nigeria launches N729bn power bond to clear legacy debts
Nigeria is returning to the capital market with a N729 billion bond to settle legacy electricity debts, signalling to investors that the government will honour its financial obligations to fix the power sector.
Nigeria will open a N729 billion Series II bond offer on August 3 to settle verified legacy debts owed to electricity generation companies and gas suppliers. The issuance, managed by CardinalStone Partners, runs for 10 business days and targets funding by August 24, pending regulatory approval.
The transaction will raise approximately N400 billion from investors through a book-building process, while the remaining N329 billion will be issued as non-cash instruments directly to eligible beneficiaries. This second tranche completes the first phase of the Presidential Power Sector Debt Reduction Program, a scheme initially authorised with a N4 trillion ceiling but reduced to a verified N3.3 trillion after line-by-line audits.
The government is leaning heavily on its track record to attract buyers. It successfully raised N501 billion in a first series earlier in 2026 and made its first scheduled coupon payment of roughly N63.5 billion on July 14. Finance Minister Taiwo Oyedele noted that all eight generation companies and 17 power plants from the first tranche have been paid in full.
Institutional investors responded positively to the initial offering. Pension fund administrators accounted for half of the cash subscriptions under Series I, while commercial banks contributed 41.5 percent. Oyedele framed the timely repayment as a deliberate signal to sovereign debt markets. “Capital is neither emotional nor patriotic. It does not respond to speeches. It responds to credibility,” he said.
Clearing these debts is designed to unlock severe liquidity bottlenecks caused by years of tariff shortfalls, settlement gaps, and grid instability. Olu Verheijen, Special Adviser to the President on energy, noted that settling the first tranche allowed generation companies to resume meeting their gas obligations and service maintenance contracts. “We are converting yesterday’s liabilities into today’s liquidity and tomorrow’s investment capacity,” she said.
The bond programme represents a shift away from relying on state budgetary allocations to fund power sector shortfalls, moving instead toward structural, market-based resolutions. Verheijen stressed that bankability begins with governments honouring contracts. “In sovereign finance, trust compounds just as powerfully as interest does,” she said. For investors, the successful rollout establishes a template for how the government might handle other large-scale infrastructure liabilities, balancing private capital deployment with state-backed risk allocation.
