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Nigeria has completed a ₦728.9 billion debt transaction through NBET Finance Company Plc to settle legacy obligations owed to electricity generation companies, extending the Federal Government’s effort to restructure liabilities accumulated in the power sector over the past decade.
The Series 2 transaction is the second issuance under the NBET Finance Company debt reduction programme, following an inaugural transaction of about ₦501 billion. The two transactions have now addressed about ₦1.23 trillion of obligations under the programme.
The proceeds of the Series 2 issuance will primarily be applied toward outstanding legacy debt owed by Nigerian Bulk Electricity Trading Plc to GenCos for electricity supplied between February 2015 and March 2025, according to the transaction documents.
The transaction is structured through NBET Finance Company, a special-purpose vehicle established by NBET to issue debt instruments under the programme. NBET’s shareholding in the SPV is held in trust for its beneficial interest.
As part of the structure, receivables owed to NBET by electricity distribution companies are assigned to the SPV, while the SPV assumes NBET’s existing payment obligations to GenCos through the novation of liabilities under the relevant power purchase agreements.
The structure effectively places both the assets supporting repayment and the legacy liabilities being settled within the financing vehicle. The receivables assigned to the SPV are expected to provide future cash flows that can be applied toward servicing the instruments issued under the programme.
The Series 2 transaction comprises a cash component and instruments issued as part of the settlement of GenCo obligations. The cash component was raised from investors, while the non-cash component forms part of the agreed settlement with participating generation companies.
All instruments issued under the programme carry the full faith and credit guarantee of the Federal Government. Under the guarantee deed, the FGN irrevocably and unconditionally guarantees the issuer’s payment obligations to the trustees for the benefit of investors.
The structure is intended to distinguish the transaction from a conventional general-obligation government bond. The liabilities being settled arise from NBET’s obligations to GenCos and are transferred into the SPV alongside the receivables supporting the transaction.
Repayment to investors will primarily be supported by a CBN sinking fund managed by the Debt Management Office and NBET, supplemented by a separate Receivables Sinking Fund managed by the bond trustee.
The CBN sinking fund will receive monthly Federal Government contributions through the Federal Ministry of Finance, while the Receivables Sinking Fund will be funded by collections from DisCos and other power-sector initiatives.
The Series 2 bonds have a seven-year tenor and mature in 2033. The securities are amortising and pay coupons semi-annually.
CardinalStone Partners acted as lead issuing house, with Comercio Partners Capital, Cordros Advisory Services, Coronation Merchant Bank, Emerging Africa Capital Advisory, FSDH Capital, Iron Capital Markets, Meristem Capital, Renaissance Securities Nigeria and United Capital acting as joint issuing houses.
ENR Advisory acted as solicitor to the issuer, while Olaniwun Ajayi LP acted as solicitor to the issue. Afrinvest Trustees served as bond trustee and Coronation Registrars as registrar.
The latest transaction is part of a broader government effort to address the accumulation of unpaid electricity sector obligations, which has constrained liquidity for generators and contributed to financial stress across Nigeria’s power market.
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