Geregu Power bond concerns deepen as Agusto withdraws A- rating

GEREGU Power Plc’s financial troubles have taken a more serious turn after credit rating agency Agusto & Co withdrew the ‘A-‘ rating assigned to the company and its N40.09 billion Series 1 Senior Unsecured Bond.

The decision followed Geregu Power’s failure to make its 8th coupon payment and 4th principal repayment on the bond, signalling a default on its debt obligations.

However, the rating agency said the payment default was not the only reason for its action. Agusto & Co also said it could no longer rely on the company’s financial information because previously issued financial statements are currently undergoing independent verification.

According to the agency, the review means the audited financial statements presently available cannot be treated as sufficiently reliable for assessing Geregu Power’s financial position and ability to meet its obligations.

“Pending completion of this review, Agusto & Co is unable to rely on the current audited financial statements and, therefore, cannot provide an opinion regarding the Company’s creditworthiness,” the agency said.

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The withdrawal effectively removes the independent ‘A-‘ assessment that had previously indicated strong credit quality and a relatively low expectation of default.

The N40.09 billion Series 1 bond was issued to support the expansion of Geregu Power’s electricity generation capacity. With the rating now withdrawn, investors have lost an important external reference point for assessing the company’s credit risk.

The situation is particularly significant because the rating withdrawal comes alongside an actual missed debt payment. In simple terms, investors are dealing with two separate concerns: Geregu has missed scheduled payments, while questions have also emerged over the reliability of its financial statements.

Agusto & Co said it would reconsider Geregu Power’s credit rating after the independent forensic review is completed and reliable audited financial statements for the financial year ended December 31, 2025, become available.

The agency did not provide a specific timeline for completing the reassessment. The development could increase pressure on Geregu Power to resolve its outstanding bond obligations and provide investors with credible financial information.

For bondholders, the immediate concern is the recovery of unpaid interest and principal. For the wider market, the issue raises questions about the financial health of one of Nigeria’s listed power-generation companies and the quality of information available to investors.

The default is also significant for Nigeria’s debt market, where companies have increasingly turned to bonds to finance expansion and long-term projects despite high interest rates and currency-related pressures.

What this means

The key issue is no longer simply that Geregu Power missed a bond payment. The bigger concern is that the company’s financial statements are being independently reviewed, while a credit-rating agency says it cannot rely on those accounts to assess the company.

That combination makes it harder for investors to determine Geregu’s true financial position.

The withdrawal of the rating does not necessarily mean the bond will not be repaid. Rather, it means Agusto & Co is currently unwilling or unable to provide an independent assessment of Geregu’s creditworthiness until reliable financial information becomes available.

The next major developments investors will watch are the outcome of the independent review, the release of reliable 2025 audited financial statements, and Geregu Power’s plan for settling the missed coupon and principal payments.

Company explanation

However, Geregu has reassured shareholders, investors and regulators of its commitment to resolving concerns surrounding its bond repayment obligations.

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The power generation company issued the clarification following recent online publications that raised questions about its ability to meet its bond repayment obligations.

It said its current board and management had conducted a comprehensive review and reconciliation of the company’s transactions, liabilities, operational commitments, financing arrangements and other financial obligations since assuming responsibility for its affairs.

According to the company, the exercise is aimed at ensuring transparency, accuracy and prudent financial management.