Federal Government Increases Power Bond Yield to 17.95% to Clear ₦728.98bn GenCo Debts

The Federal Government has opened subscription for its ₦728.98 billion Series 2 Power Sector Bond, raising the yield range to between 17.85% and 17.95% to attract institutional investors.

The yield hike represents a 35 to 45 basis point increase over the 17.50% coupon offered during the inaugural series earlier this year. The seven-year bond issue, which opened on August 3 and is scheduled to close on August 14, forms part of a broader ₦4 trillion Multi-Instrument Issuance Programme designed to clear legacy liabilities owed to electricity generation companies (GenCos).

Issued through NBET Finance Company Plc and fully backed by the Federal Government, the offer is split into two tranches: a ₦400 billion cash bond and a ₦328.98 billion non-cash bond. The proceeds will be used to settle verified unpaid invoices for electricity supplied to the national grid between February 2015 and March 2025.

To boost investor demand, the Central Bank of Nigeria has classified the security as a liquid asset, while the Ministry of Finance granted it tax-exempt status. The bond also qualifies as an eligible investment for Pension Fund Administrators and will be listed on both the Nigerian Exchange Limited (NGX) and the FMDQ Securities Exchange.