Nigeria’s foreign exchange reserves are expected to climb to about $45 billion by the end of 2025, following strong investor confidence in the country’s $2.3 billion Eurobond issuance, according to new projections from Lagos-based investment firm, CardinalStone.
In its latest Macroeconomic Update released after the bond sale, the firm said the huge investor demand that followed the Federal Government’s return to the international debt market reflects renewed optimism about Nigeria’s economic outlook and improving fiscal credibility.
“The Federal Government of Nigeria returned to the international debt market with a $2.3 billion Eurobond offer. Investors’ appetite was strong, with total bids exceeding $12.7 billion (excluding joint lead managers’ participation), translating to an impressive 5.5x bid-to-offer ratio,” the report stated.
The Eurobond was issued in two tranches with coupons of 8.62 per cent and 9.13 per cent, respectively. According to CardinalStone, this strong subscription level shows that global investors have regained confidence in Nigeria’s economy, supported by credit rating upgrades from major international agencies. These upgrades, the firm noted, reflect a decline in Nigeria’s perceived sovereign risk and an improvement in its credibility within global debt markets.
CardinalStone said the Eurobond inflows will help strengthen Nigeria’s external reserves and improve currency stability through higher dollar inflows. “This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation,” the report added.
The firm projected that with the inflows from the Eurobond, Nigeria’s foreign exchange reserves could reach $45 billion by December 2025, assuming stable oil prices, steady foreign investment inflows, and sustained fiscal discipline.
It further explained that the new borrowing does not change Nigeria’s debt outlook for the year because it had already been included in the government’s earlier borrowing plan. CardinalStone said part of the proceeds would be used to refinance a $1.1 billion Eurobond maturing on November 21, 2025, while the rest would help bridge the federal budget deficit.
The investment house also estimated that Nigeria’s total public debt could rise to about N166.7 trillion by the end of 2025, equivalent to 42.2 per cent of the country’s Gross Domestic Product (GDP).
In a separate analysis, financial advisory firm Comercio Partners described the success of the Eurobond issuance as a “positive signal” for Nigeria’s fiscal position, though it warned that persistent foreign exchange instability could erode the gains.
“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 increases interest payments in hard currency,” Comercio Partners said.
The firm cautioned that renewed exchange rate volatility could undermine investor sentiment and raise debt-servicing costs, since depreciation of the naira would increase the local currency value of external obligations.
As of June 30, 2025, data from the Debt Management Office (DMO) showed that Nigeria’s total public debt stood at N152.40 trillion ($99.66 billion), comprising external debt of $46.98 billion (47 per cent) and domestic debt of $52.67 billion (53 per cent).
The DMO confirmed that proceeds from the Eurobond sale will be used to fund the 2025 federal budget and refinance maturing external debt, including the $1.118 billion Eurobond due later in November.
Although Nigeria’s debt-to-GDP ratio remains below the 40 per cent international sustainability threshold, analysts have continued to express concern about the high debt-service-to-revenue ratio, which currently exceeds 40 per cent. This, they say, limits the government’s fiscal flexibility and increases its exposure to external economic shocks.
The international bookrunners for the Eurobond transaction were Citi (Billing and Delivery), Goldman Sachs International, J.P. Morgan, and Standard Chartered Bank, while Chapel Hill Denham served as the sole Nigerian bookrunner.
Last week, the National Assembly approved President Bola Tinubu’s request to raise $2.35 billion in foreign loans to fund the 2025 budget deficit and refinance maturing Eurobonds. The lawmakers also approved plans to issue a $500 million sovereign Sukuk in the international capital market to diversify Nigeria’s debt instruments and attract a broader range of investors.
Economists believe that the strong international response to Nigeria’s Eurobond shows growing confidence in the government’s ongoing reforms, including efforts to unify exchange rates, attract foreign investment, and reduce fiscal imbalances. However, they warn that the long-term benefits will depend on sustained currency stability and prudent debt management.
