Newly compiled data from the Debt Management Office (DMO) reveal a significant rise in the Federal Government’s Eurobond-related expenses between Q3 2023 and Q2 2025, underscoring the growing fiscal weight of commercial external borrowing on Nigeria’s public finances.
The records show that Eurobond servicing reached $2.93bn over the period, making up 31.5 per cent of the country’s total external-debt service of $9.32bn. A substantial majority of that figure—$2.43bn, or 83 per cent—went toward interest payments, rather than settling the underlying principal. Analysts say the pattern highlights the high cost of market-priced debt and the long-term implications for the government’s budget.
A closer look at quarterly figures shows sharp fluctuations tied to Nigeria’s bond-redemption cycle. The first full quarter of President Bola Tinubu’s administration, Q3 2023, recorded the highest Eurobond servicing bill, with $943.66m paid out following the redemption of a maturing $500m note. Eurobonds accounted for 67.8 per cent of all external-debt servicing in that quarter alone.
Subsequent quarters reflected Nigeria’s recurring coupon obligations. Eurobond payments fell to $148.57m in Q4 2023, then climbed steadily through 2024, hitting $427.72m in Q3 2024. A similar spike appeared in Q1 2025, where servicing again rose to $427.72m, representing 30.7 per cent of all external-debt service for the period. The most recent quarter in the data, Q2 2025, showed a drop to $260.07m, though interest remained the sole driver of costs.
During the two-year window, only $500m of the $2.93bn went into reducing the principal on Nigeria’s Eurobond stock. Meanwhile, the stock itself grew from $15.62bn in June 2023 to $17.32bn by June 2025—an increase of 10.88 per cent—making Eurobonds 36.86 per cent of total external debt.
The period also saw fresh borrowing. In September, the Federal Executive Council approved a plan to raise $2.3bn in new Eurobonds under the 2024–2025 borrowing programme, with the National Assembly endorsing the move. By November, Nigeria successfully secured $2.35bn from global investors in a dual-tranche offering that drew a record $13bn in bids. The 10-year and 20-year notes were issued at 8.63 per cent and 9.13 per cent, respectively.
The DMO said the strong order book reflected broad investor confidence, with buyers from the UK, North America, Europe, Asia, the Middle East, and Nigeria itself. President Tinubu welcomed the response, saying it reaffirmed Nigeria’s standing in the international capital market, while Finance Minister Wale Edun cited the outcome as proof of support for the government’s reform agenda.
Proceeds from the issuance are earmarked for financing the 2025 budget deficit and other government needs. Major global banks, including Citigroup, Goldman Sachs, J.P. Morgan, Standard Chartered, and Chapel Hill Denham, served as bookrunners.
Investment firms have also weighed in on the economic implications. CardinalStone projected that Nigeria’s external reserves could reach $45bn by the end of 2025, supported by renewed investor interest, though it estimates total public debt could rise to N166.7tn, or 42.2 per cent of GDP. Comercio Partners, while describing the Eurobond issuance as a positive signal, warned that gains could be eroded if currency instability resurfaces.
Experts React
Financial specialists offered mixed assessments of Nigeria’s growing reliance on Eurobonds.
Olatunde Amolegbe, Managing Director/CEO of Arthur Stevens Asset Management, said Eurobonds would remain part of Nigeria’s financing toolkit because of their speed and flexibility. He noted that governments typically rely on a blend of borrowing instruments and stressed that the key challenge is ensuring responsible deployment and maintaining repayment capacity.
Economist Adewale Abimbola took a more optimistic view, arguing that Nigeria had a strong repayment record that continues to build investor trust. He maintained that, with careful management of interest-rate and exchange-rate exposure, risks remain contained—especially as the naira’s recent recovery reduces currency pressure.
However, finance professional Dayo Adenubi urged more caution. He described Eurobonds as “market-driven financing” that offers quick access to long-term capital but at higher cost and higher refinancing risk. With interest payments made semi-annually and principal settled at maturity, he warned that governments could become dependent on issuing new Eurobonds to refinance old ones. He pointed to Ghana, Sri Lanka, and Kenya as examples where misaligned policies led to severe debt distress.
Adenubi added that the success of Eurobond-funded projects is critical to avoiding repayment strain: if returns fall short, debt-service pressures can escalate rapidly.
As Nigeria continues to tap international markets to support economic reforms, experts say policymakers must balance accessibility against sustainability, ensuring that mounting interest obligations do not overwhelm the country’s fiscal space in the years ahead.