By Ada Samson
Nigeria’s foreign exchange reserves are projected to rise to $45bn by the end of 2025, driven by strong investor confidence following the country’s successful $2.3bn Eurobond issuance, according to the investment house CardinalStone.
In its Macroeconomic Update released on the offering, the firm stated that the robust appetite for the Eurobonds, which recorded a significant oversubscription, reflects renewed investor optimism about Nigeria’s macroeconomic trajectory.
“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”.
“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,” the firm stated.
CardinalStone projected that the incoming Eurobond funds will strengthen Nigeria’s external position and improve currency stability through a significant accumulation of reserves.
“This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation. 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 report noted.
As a result of this new borrowing, CardinalStone estimated that Nigeria’s year-end total debt level would rise to N166.7tn, which represents 42.2 per cent of the country’s Gross Domestic Product.
In a separate assessment, the firm Comercio Partners described the Eurobond’s success as a “positive signal” for Nigeria’s fiscal outlook, though it warned that the gains could be undermined if exchange rate instability resurfaces.
The firm highlighted the dual-edged nature of such external borrowing. “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. It further cautioned that “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.”
Official data from the Debt Management Office (DMO), current as of 30 June 2025, placed Nigeria’s total public debt at N152.40tn, equivalent to $99.66bn. This figure comprises external debt of $46.98bn, accounting for 47 per cent of the total, and domestic obligations of $52.67bn, which make up the remaining 53 per cent.
The DMO has confirmed that the proceeds from the recent Eurobond sale will be used to support the 2025 federal budget and to refinance a part of Nigeria’s maturing external obligations, specifically the $1.118bn Eurobond which falls due in November 2025.
While Nigeria’s debt-to-GDP ratio remains below the 40 per cent sustainability threshold set by the government, financial analysts have continued to sound a note of caution. They point out that the high debt-service-to-revenue ratio, which remains above 40 per cent, continues to limit the government’s fiscal flexibility and heightens the nation’s vulnerability to external economic shocks.
The transaction was managed by an international consortium of bookrunners, including Citi, which acted as billing and delivery agent, Goldman Sachs International, J.P. Morgan, and Standard Chartered Bank, with Chapel Hill Denham serving as the sole Nigerian bookrunner.
This move followed last week’s approval by the National Assembly of President Bola Tinubu’s request to raise $2.35bn in foreign loans to finance the 2025 budget deficit and refinance the maturing Eurobonds, alongside a separate $500m sovereign Sukuk issuance planned for the international capital market.
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