ABUJA, Nigeria (VOICE OF NAIJA)-Nigeria’s foreign exchange reserves are expected to reach $45bn by the close of 2025, supported by improved investor sentiment following the country’s successful $2.3bn Eurobond issuance, according to investment firm CardinalStone.
In its Macroeconomic Update on the issuance, the firm explained that the strong demand for the Eurobond which achieved a 5.5x oversubscription signals renewed investor confidence in Nigeria’s economic outlook.
“The Federal Government of Nigeria returned to the international debt market with a $2.3bn Eurobond offer. Investors’ appetite was strong, with total bids exceeding $12.7bn (excluding joint lead managers’ participation), translating to an impressive 5.5x bid-to-offer ratio,” the firm stated.
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“Coupons of 8.62 per cent and 9.13 per cent were set, respectively. The robust demand at the auction indicates that investors are confident in Nigeria’s macroeconomic narrative. Credit rating upgrades from major agencies contributed to this confidence, reflecting a perceived decline in sovereign risk and a bolstering of the country’s credibility in the global debt market.”
CardinalStone added that inflows from the Eurobond will strengthen Nigeria’s external reserves position and help stabilise the exchange rate.
“This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation,” the report noted.
“We project 2025 FX reserves to reach $45.0bn by the end of the year. Importantly, the new Eurobond issuance does not alter our debt outlook for the year, as the planned borrowing was already factored into our projections. We expect a portion of the proceeds to be channelled towards refinancing maturing Eurobonds of $1.1bn on 21 November 2025 and bridging potential budgetary shortfalls.”
The firm estimated that Nigeria’s year-end public debt would increase to N166.7tn, representing 42.2 per cent of GDP.
In a separate analysis, Comercio Partners described the success of the Eurobond issuance as a positive signal for the country’s fiscal trajectory, but cautioned that potential foreign exchange instability could diminish the benefits.
“On one hand, the inflow boosts external reserves, provides fiscal breathing space, and enhances the government’s capacity to meet short-term obligations. On the other hand, it raises exposure to foreign exchange risk and heightens interest burdens in hard currency,” Comercio Partners said.
“A renewed bout of FX volatility would not only undermine investor sentiment but also amplify Nigeria’s debt-servicing costs, as depreciation of the naira directly increases the domestic currency burden of external obligations.”
As of 30 June 2025, Nigeria’s total public debt stood at N152.40tn ($99.66bn), with external obligations of $46.98bn (47 per cent) and domestic debt of $52.67bn (53 per cent), based on figures from the Debt Management Office.
The DMO confirmed that proceeds from the Eurobond issuance will be used to support the 2025 federal budget and refinance part of the country’s maturing external loans, including the $1.118bn Eurobond due in November 2025.
Although Nigeria’s debt-to-GDP ratio remains below the 40 per cent sustainability marker, analysts noted that the debt-service-to-revenue ratio which is above 40 per cent continues to restrict fiscal flexibility and increases vulnerability to external pressures.
The international bookrunners for the transaction were Citi (Billing and Delivery), Goldman Sachs International, J.P. Morgan, and Standard Chartered Bank, with Chapel Hill Denham serving as the sole Nigerian bookrunner.
Last week, the National Assembly approved President Bola Tinubu’s request to secure $2.35bn in foreign borrowings to finance the 2025 budget deficit and refinance maturing Eurobonds, in addition to a $500m sovereign Sukuk to be issued on the international market.