Nigeria's corporate debt market is facing renewed scrutiny over the timely settlement of debt obligations, following the recent default by Geregu Power Plc and questions arising from reported delays in the redemption of commercial paper issued by other companies. A closer examination of debt performance reports published by FMDQ Securities Exchange has drawn attention to cases in which payments were reportedly completed weeks after their stated maturity dates.
The concerns go beyond whether issuers eventually repay investors, and touch on a fundamental principle of the capital market: when an issuer raises money from investors under a contractual repayment schedule, the agreed maturity date must carry real meaning. Geregu Power’s failure to meet scheduled payments on its N40.09 billion Series 1 bond in July 2026 led to its classification as being in credit default by FMDQ.
Geregu later disclosed that the eighth coupon and part of the principal repayment had been paid to the trustees on August 20, 2026. While the Geregu episode involved an expressly identified credit default, the settlement dates reported in other cases raise a separate but related question: how effectively does the market identify, explain and address delayed debt obligations?
One case concerns Mixta Real Estate Plc, whose commercial paper programme appears in the FMDQ performance information. According to the information, Mixta Real Estate’s Series 35 commercial paper, issued on October 31, 2023, had a maturity date of July 26, 2024, but the reported final settlement date was September 6, 2024, representing a delay of 42 calendar days.
Industry experts argue that a payment that arrives weeks after the contractual date affects the investor’s cash flow, even if the principal is ultimately recovered. They emphasise that it is not healthy for an enterprise that knows the time value of money. According to Mike Akannor, an economist and financial analyst, the available dates alone do not establish the cause of the delays.
A further question arises from the reported entry for Neveah Ltd’s Series 5 commercial paper, which gives September 28, 2026, as the maturity date, but identifies September 27, 2023, as the date on which final payment was made. If these dates are accurate, the final payment would have preceded the stated maturity date by approximately three years.
FMDQ Securities Exchange said it was unaware of the reasons for settlement defaults by corporate bond and commercial paper issuers, adding that the causes are not disclosed and that the Exchange does not investigate matters considered internal to the organisations concerned.
Key points
- Delays in debt obligations can create liquidity problems and potentially expose investors to additional costs.
- The discrepancies in debt performance reports deserve an explanation because there is time value of money.
- The market needs to identify, explain and address delayed debt obligations effectively.
