Investors seeking exposure to the Federal Government-backed initiative aimed at restoring liquidity in Nigeria’s electricity sector have less than nine days to participate in the N590 billion Series 1 Power Sector Bond, which is scheduled to close on December 30, 2025.
The bond, issued by NBET Finance Company Plc, is the first tranche under the Federal Government’s N4 trillion Presidential Power Sector Debt Reduction Programme. The offer, which opened on December 19, is designed to address long-standing payment arrears owed to electricity generation companies (GenCos) and improve cash flow across the power value chain.
According to information circulated to prospective investors by CardinalStone Partners Limited, the programme was approved by the Federal Executive Council (FEC) and is fully guaranteed by the Federal Government of Nigeria. NBET Finance Company Plc, the issuer, is a special purpose vehicle sponsored by the Nigerian Bulk Electricity Trading Plc (NBET), a government-owned agency.
Clearing Legacy Power Sector Debts
The broader debt reduction programme targets verified unpaid invoices accumulated between February 2015 and March 2025. As part of the initiative, President Bola 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 tasked with developing a fiscally sustainable framework to settle NBET’s obligations to GenCos and rebuild investor confidence in the electricity market. Based on its recommendations, the FEC approved a structured N4 trillion debt settlement framework.
The strategy rests on three pillars: establishing the settlement framework, executing agreements with participating GenCos at agreed discounts, and implementing safeguards to prevent a future build-up of sector debts.
Proceeds from the N590 billion Series 1 bond are expected to be applied mainly toward clearing NBET’s outstanding liabilities to GenCos within the covered period.
Bond Structure and Key Features
The bond is split into two tranches: a N300 billion cash tranche (Tranche A) and a N290 billion non-cash tranche (Tranche B). Both tranches have a seven-year tenor, feature fixed-rate semi-annual coupon payments, and follow an amortising repayment structure.
Pricing for the bond is set within a range of 16.75 per cent to 17.00 per cent. The minimum subscription is N5 million, with additional investments accepted in multiples of N1 million. The bonds are expected to be listed on the Nigerian Exchange Limited and/or FMDQ Securities Exchange Limited, with an indicative settlement date of January 8, 2026.
The bond benefits from multiple credit enhancements, including full sovereign backing, eligibility for pension fund investment, classification as liquid assets by the Central Bank of Nigeria, and tax exemption approval from the Ministry of Finance.
CardinalStone Partners Limited is serving as the lead issuing house and financial adviser, alongside the Africa Finance Corporation as joint financial adviser.
Concerns Over SPV Structure
Despite government assurances, some industry stakeholders have raised concerns about the structure of the transaction, particularly the use of a special purpose vehicle to issue the bond.
A source familiar with the deal questioned whether the licence granted by the Nigerian Electricity Regulatory Commission (NERC) to NBET permits the creation of an SPV to assume market liabilities. The source also raised issues around transparency, including the identity of the SPV’s shareholders and the rationale for transferring GenCos’ claims to a separate legal entity.
The source further queried why the Federal Government did not issue the bond directly, instead opting for a more complex structure involving multiple advisers, and whether advisory and transaction fees would be deducted from the N4 trillion programme or charged to the federal budget.
As the December 30 deadline approaches, market participants are closely watching subscription levels and regulatory clarity, with the bond seen as a critical test of the government’s commitment to resolving Nigeria’s persistent power sector liquidity challenges.
