Agusto & Co, a leading credit rating agency, has officially withdrawn its rating on Geregu Power Plc following the company's failure to meet its obligations on a N40.09 billion bond issuance. The withdrawal, announced on August 14, 2026, comes after the power generation company defaulted on the bond, which was originally issued in 2020.
Reasons for the Withdrawal
According to the rating agency, the decision to withdraw the rating was driven by insufficient information to continue the assessment, as well as the material breach of the bond's terms. Agusto & Co had previously assigned a rating of 'A-' to Geregu Power, but the default triggered a review that ultimately led to the withdrawal.
The bond, which was issued to fund the expansion of Geregu Power's operations, has been a significant part of the company's debt profile. The default means that the company has failed to make scheduled interest or principal payments, raising concerns among investors and stakeholders.
Impact on Geregu Power and Investors
The withdrawal of the rating is expected to have several implications. For Geregu Power, it means the company will face higher borrowing costs in the future, as lenders and investors rely on credit ratings to assess risk. For existing bondholders, the default and rating withdrawal signal increased credit risk, potentially leading to a loss in the value of their investments.
Analysts note that the development could also affect the broader Nigerian power sector, as it highlights the financial challenges facing some generation companies. Geregu Power, one of the major players in the sector, has been under pressure due to liquidity issues and the need to service its debt obligations.
Company's Response and Next Steps
Geregu Power has not yet issued an official statement regarding the default or the rating withdrawal. However, industry observers expect the company to engage with bondholders to restructure its debt or seek alternative financing options. The company's management may also need to provide more transparent financial disclosures to regain the confidence of the market.
In the meantime, Agusto & Co's action serves as a cautionary tale for other issuers in the region, emphasizing the importance of meeting debt obligations to maintain a good credit standing.
