November 6, 2025/CSL Report

• As anticipated, authorities have successfully raised a US$2.3 billion Eurobond, which was strongly received by investors.
• Proceeds will help refinance the maturing US$1.1 billion Eurobond due this month and support the 2025 budget.
• The new issuance may temporarily push yields higher across the Eurobond curve before a gradual moderation over the medium term.

Nigeria has successfully returned to the international debt markets, raising US$2.3 billion through a new Eurobond issuance that attracted robust investor participation. Total bids reportedly exceeded US$13.0 billion, reflecting sustained investor confidence in Nigeria’s improving macroeconomic and fiscal outlook. This strong demand came despite recent geopolitical headwinds, including remarks by the US President concerning Nigeria’s handling of religious-related violence.

The issuance was structured in two tranches, a 10-year note worth US$1.2 billion, and a 20-year note worth US$1.1 billion. Proceeds from the sale will primarily be used to refinance Nigeria’s US$1.1 billion Eurobond maturing this month and to partly finance the 2025 fiscal deficit, which is expected to exceed initial budget projections. We highlight that pricing on both issuances tightened during the book-building process, reflecting strong investor demand and positive investor sentiment.

The 10-year note was priced at 8.6308%, below the initial guidance of 9.125%, while the 20-year note cleared at 9.1297%, down from 9.675% at guidance. In the near term, the new dollar bonds may exert slight upward pressure on yields across the Eurobond curve. However, we expect yields to gradually moderate over the medium term, supported by favourable macroeconomic conditions.

It is worth mentioning that the issuance aligns closely with our previously stated views (see CSL Macro Report: “Fed Rate cut could spur fresh Eurobond issuance for Nigeria”, 19 August), where we anticipated that the government might issue a 10-year note to bridge the gap in the existing Eurobond yield curve. While the inclusion of a 20-year tranche was not initially expected, this move appears to be a deliberate strategy aimed at extending Nigeria’s average debt maturity profile, consistent with the Debt Management Office’s (DMO) medium-term debt management objective of maintaining a minimum 10-year average maturity for its overall portfolio.

Accordingly, we believe that the combined issuance will help mitigate rollover and refinancing risks, thereby easing repayment pressures in the short to medium term. From a debt sustainability perspective, the new Eurobonds could keep Nigeria’s external debt-to-total debt ratio slightly above the DMO’s 45% threshold by year-end (47.1% as of the end of H1 2025). To offset this, authorities may opt to ramp up.

domestic borrowing over the remainder of the fiscal year, aligning with our earlier view that the government is likely to exceed its initial domestic borrowing target. However, it is worth noting that adherence to such limits has historically been inconsistent. For instance, while authorities set a cap of 30% for external debt between 2020 and 2023, the actual share averaged approximately 39.6% during that period.

On the fiscal side, as noted earlier, part of the Eurobond proceeds will be directed toward financing the 2025 budget, with a particular focus on the capital expenditure component, which was set at ₦20.7 trillion. Given the limited time remaining in the fiscal year, we anticipate that the execution of several capital projects will likely spill over into 2026, mirroring the pattern seen with the 2024 budget, which was extended through the end of this year. While fiscal performance remains challenging to estimate, partly due to delays in the release of budget implementation reports by the Budget Office (2024 figures were only published in mid-October), we project that the fiscal deficit could widen to around 4.2% of GDP in 2025, up from 3.6% of GDP recorded last year.

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​​​CSL Macro Report – New Eurobond Issuance.pdf​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​