Traditional credit analysis has long relied on a comfortable premise: if a company boasts strong historical earnings, solid historical cash flows, and favourable credit ratings, its future debt obligations are secure.
However, the recent credit default by Geregu Power Plc on its N40.09 billion Series 1 senior unsecured bond has shattered that assumption.
Geregu’s bond default serves as a stark wake-up call for investors and rating agencies alike.
It proves that evaluating a corporate borrower requires looking far beyond past financial performance to aggressively stress-test forward-looking cash realities and systemic vulnerabilities.
“Geregu Power’s bond default reinforces the importance of looking beyond historical financial performance when assessing creditworthiness”, said Intelligence Africa Analytics Limited in its August 10 credit market watch.
