N590bn power bond deadline looms for investors

Investors interested in the Federal Government offer to boost liquidity in the power sector have less than nine days to subscribe to the N590bn Series 1 Power Sector Bond issued by NBET Finance Company Plc, with the offer scheduled to close on December 30, 2025, The PUNCH reports.

The bond, launched under the N4tn Presidential Power Sector Debt Reduction Programme, is designed to settle long-standing debts owed to electricity generation companies and restore liquidity to Nigeria’s power sector.

This was disclosed in a mail sent to prospective investors by financial adviser, CardinalStone Partners Limited, and obtained by The PUNCH on Monday, showed that the bond offer, which opened on December 19, is the first tranche under a broader N4tn Power Sector Debt Reduction Programme approved by the Federal Executive Council.

The issuer, NBET Finance Company Plc, is a Special Purpose Vehicle sponsored by the Nigerian Bulk Electricity Trading Plc, an agency of the Federal Government, with the bond fully guaranteed by the Federal Government of Nigeria.

The programme, approved by the Federal Executive Council under President Bola Ahmed Tinubu, aims to address Legacy Debt accrued between February 2015 and March 2025 while boosting investor confidence in the sector.

The mail read, “CardinalStone Partners Limited is pleased to inform you of the LAUNCH of the NBET Finance Company PLC (“the Issuer”) N590bn Series 1 Power Sector Bond Issue (“the Issue”) under its N4tn Multi-Instrument Issuance Programme (“the Programme”). The offer is NOW OPEN and scheduled to close on 30 December 2025.”

Under the initiative, President Tinubu constituted the Presidential Power Sector Debt Reduction Committee, chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

The committee was mandated to design a fiscally responsible framework to settle debts owed by NBET to power generation companies and restore investor confidence across the electricity value chain.

Following the committee’s recommendations, the Federal Executive Council approved the creation of a N4tn structured debt programme to offset verified unpaid invoices owed to GenCos between February 2015 and March 2025.

According to the programme outline, the debt resolution strategy is anchored on three key pillars: the establishment of the N4tn settlement framework, execution of settlement agreements with participating GenCos at agreed discounts, and a coordinated mechanism to prevent future debt accumulation in the market.

The proceeds of the N590bn Series 1 bond are expected to be applied primarily towards settling NBET’s outstanding liabilities to GenCos within the covered period.

The bond is backed by the full faith and credit of the Federal Government and benefits from several credit enhancements, including eligibility for pension fund investments, classification as liquid assets by the Central Bank of Nigeria, and tax exemption approval from the Ministry of Finance.

Under the offer structure, the issuance is split into two tranches: Tranche A, a N300bn cash bond, and Tranche B, a N290bn non-cash bond. Both tranches have a tenor of seven years, with a fixed-rate semi-annual coupon and an amortising repayment structure.

The price range has been set between 16.75 per cent and 17.00 per cent, while the minimum subscription is N5m, with additional investments in multiples of N1m. The bonds will be listed on the Nigerian Exchange Limited and/or FMDQ Securities Exchange Limited, with an indicative settlement date of January 8, 2026.

CardinalStone Partners Limited is acting as the Lead Issuing House and Financial Adviser, alongside the Africa Finance Corporation as Joint Financial Adviser. Despite the government’s assurances, industry stakeholders have raised red flags about the structure of the SPV created for the transaction.

A party involved in the transaction, who spoke on the condition of anonymity due to the lack of authorisation to speak on the matter, raised concerns over the legality and transparency of the Special Purpose Vehicle used for the bond issuance.

The source questioned whether the licence issued by the Nigerian Electricity Regulatory Commission to the Nigerian Bulk Electricity Trading Plc permits the creation of an SPV to assume market liabilities, noting that NBET Finance Company Plc is a separate legal entity with different shareholders.

“Does the licence issued by NERC to NBET allow this ‘floating’ of an SPV? Please tell us who these shareholders are. And why NBET wants all liabilities of GenCos transferred to this entity, unknown to the NESI.”

According to the source, it remains unclear who the shareholders of the SPV are and why NBET is seeking to transfer GenCos’ liabilities to an entity that is not widely recognised within the Nigerian Electricity Supply Industry.

The source further queried why the Federal Government did not issue the bond directly, instead opting for a complex structure involving multiple financial advisers. Concerns were also raised over the fees associated with the transaction, including whether such costs would be deducted from the N4tn debt programme or charged to the federal budget.

“Tell me also why FGN cannot issue the bond itself instead of going through over 23 advisors designing a bond that will not cover the haemorrhage. Also, tell me where the fees are charged coming from?. Is it from the N4tn or from the budget?” the source added.