⚡ CardinalStone Leads ₦501bn Power Sector Bond as FG Moves to Clear GenCo Arrears

[Olori Uwem]

CardinalStone Leads ₦501bn Power Sector Bond as FG Moves to Clear GenCo Arrears

The Big Development

CardinalStone Partners Limited has successfully led the inaugural ₦501.02 billion bond issuance under the ₦4 trillion Power Sector Multi-Instrument Issuance Programme.

The firm acted as:
• Lead Financial Adviser
• Lead Issuing House

The programme is part of the Federal Government’s Presidential Power Sector Debt Reduction Programme (PPSDRP).

Breakdown of the ₦501bn Bond

Tenor:
• 7-year bond

Structure:
• ₦300bn offered to institutional and individual investors
• ₦201bn allocated to eligible Power Generation Companies (GenCos) that signed settlement agreements

The offering was fully subscribed, reflecting strong investor appetite.

️ Government Backing

The bond is:
• Guaranteed by the full faith and credit of the Federal Government of Nigeria
• Sponsored by Nigerian Bulk Electricity Trading Plc (NBET)

The broader programme is championed by President Bola Tinubu.

Why This Programme Matters

For over a decade, Nigeria’s power sector has faced:
• Persistent payment arrears to GenCos
• Liquidity constraints
• Weak balance sheets
• Reduced investor confidence

The debt overhang has limited:
• Generation capacity expansion
• Infrastructure investment
• Financial sustainability across the power value chain

This bond issuance is designed to:
• Clear outstanding obligations
• Restore liquidity
• Improve sector stability
• Strengthen investor confidence

Capital Market Significance

The transaction represents:
• One of the largest domestic bond issuances tied to power sector reform
• A milestone for Nigeria’s debt capital markets
• Continued investor demand for credit-enhanced public-sector instruments

The involvement of the Debt Management Office (DMO) further reinforced structuring credibility.

️ CardinalStone’s Role

CardinalStone provided end-to-end advisory services, including:
• Transaction structuring
• Regulatory coordination
• Stakeholder engagement
• Investor distribution
• Execution leadership

The firm acknowledged collaboration from:
• The Special Adviser to the President on Energy
• NBET management
• The DMO
• The Ministry of Finance under the leadership of Wale Edun

What This Means for the Power Sector

Liquidity Relief for GenCos

The bond helps settle outstanding debts, strengthening balance sheets.

Improved Sector Confidence

Government-backed guarantee reduces credit risk perception.

Capital Market Deepening

Strengthens domestic fixed-income market sophistication.

Reform Signalling

Demonstrates commitment to structural reforms in energy financing.

InvestingPort Insight

Nigeria’s power sector challenges have long been financial, not just operational.

This bond issuance:

Converts arrears into structured, tradeable instruments
Enhances transparency in debt resolution
Provides predictability for GenCos
Signals reform credibility to investors

However, long-term sustainability will depend on:
• Cost-reflective tariffs
• Efficient distribution networks
• Improved collection rates
• Ongoing fiscal discipline

The ₦501bn issuance is a major first step — but execution across the ₦4tn programme will determine its ultimate success.