The Federal Government of Nigeria is preparing to refinance its $1.118 billion sovereign Eurobond maturing in November, following the National Assembly’s approval of a $2.85 billion external borrowing request by President Bola Tinubu.
Without the planned refinancing, the government would need to pay back nearly $1.2 billion to foreign investors—an outflow that analysts say could deplete Nigeria’s external reserves and reverse recent gains in the naira’s value.
Market watchers believe the refinancing will attract relatively lower interest rates, given the country’s improving macroeconomic outlook and the global trend of monetary policy easing.
“Despite some lingering investor caution, Nigeria’s upgraded credit ratings across major agencies have improved our standing in global markets,” a senior economist explained.
Government Targets Fiscal Stability and Debt Management
As part of its broader debt strategy, Nigeria aims to raise approximately $3 billion in the international market, including a sovereign Sukuk, to diversify its borrowing portfolio. Of the approved loan, $2.347 billion will go toward financing the 2025 budget deficit, while $1.118 billion will refinance the expiring Eurobond.
The House of Representatives’ approval aligns with the Debt Management Office (DMO)’s roadmap to strengthen fiscal discipline and maintain foreign exchange stability.
Oluwadamilare Oladeji, Chief Investment Officer at Erad Partners Limited, noted that rolling over the bond rather than settling it from reserves “preserves FX buffers and signals prudent fiscal management.”
Investor Sentiment and Market Outlook
Oladeji highlighted that the move positions Nigeria advantageously before global financial conditions tighten, given the U.S. Federal Reserve’s ongoing rate cuts.
He added that investors are showing renewed confidence due to ongoing reforms such as FX market liberalisation, fuel subsidy removal, and a more orthodox monetary policy approach by the Central Bank of Nigeria (CBN).
“Refinancing instead of full repayment lowers short-term rollover risks and supports investor confidence,” he said.
With the lawmakers’ approval, Nigeria’s next Eurobond issuance is expected to range between 5-year and 15-year tenors, alongside a $500 million Sukuk bond planned for later this year.
While the refinancing strategy broadens Nigeria’s funding sources, experts caution that it could raise foreign debt servicing costs if revenue performance does not improve.
