Nearly $3bn spent on Eurobond debt servicing under Tinubu

The Federal Government has allocated approximately $2.93 billion for servicing Eurobond debt over eight quarters during President Bola Tinubu's tenure, as indicated by an analysis of external debt-service records released by the Debt Management Office.

The data, which spans from Q3 2023 to Q2 2025, reveals that Eurobond obligations represented 31.5 percent of Nigeria’s total external debt service amounting to $9.32 billion over the two-year period.

Notably, the payment structure is significant: interest payments accounted for $2.43 billion of the $2.93 billion expended on Eurobonds, indicating that 83 percent of all Eurobond servicing during this timeframe was directed towards interest rather than principal.

This situation underscores the high cost of Nigeria’s reliance on commercial borrowing and implies that costly debt will continue to pose a substantial challenge to government finances for the foreseeable future.

Tinubu took office in May 2023, marking Q3 2023 as the first complete quarter of his administration. This quarter also emerged as the most expensive within the two-year timeframe, as Nigeria settled a maturing Eurobond.

During Q3 2023, the country disbursed a total of $943.66 million in Eurobond obligations, which included a $500 million principal repayment and $443.66 million in interest. Nigeria’s overall external-debt servicing for this period reached $1.39 billion, indicating that Eurobonds constituted 67.8 percent of the total foreign-debt obligations for that quarter.

This quarter remains the one with the highest Eurobond proportion under the Tinubu administration. In Q4 2023, Eurobond servicing experienced a significant decline as no principal payments were due. The government disbursed $148.57 million, all of which was interest, while total external-debt servicing amounted to $943.17 million, with Eurobonds making up only 15.8 percent of the total for that quarter.

Nigeria’s Eurobond obligations began to rise again in Q1 2024, when the government paid $282.57 million in interest. The total external-debt servicing for that quarter was $1.12 billion, resulting in Eurobonds holding a 25.2 percent share.

Of the $2.93 billion allocated for Eurobonds, merely $500 million was directed towards decreasing the debt stock; the remaining $2.43 billion was utilized for interest payments. The data further indicates that Eurobonds accounted for between 13.8 percent and 67.8 percent of Nigeria’s total external debt service in each quarter analyzed.

A deeper examination revealed that Nigeria’s Eurobond obligations reached $17.32 billion as of June 2025, representing 36.86 percent of the nation’s total external debt, based on information from the Debt Management Office (DMO).

This signifies an increase from $15.62 billion in June 2023, when Eurobonds constituted 36.19 percent of external debt. The data illustrates that Nigeria’s Eurobond stock increased by $1.70 billion between the two timeframes — a 10.88 percent rise — highlighting the country’s escalating reliance on high-interest commercial debt.

In September, the Federal Executive Council sanctioned plans to secure $2.3 billion through Eurobond sales as part of the 2024–2025 borrowing strategy, with an additional $1.1 billion earmarked for refinancing maturing foreign obligations. The National Assembly also approved the foreign borrowing.

By November, Nigeria successfully raised $2.35 billion from international investors via a dual-tranche Eurobond issuance that garnered a record $13 billion in bids, as stated by the Debt Management Office.

The offering, divided between a 10-year and a 20-year note, represents Nigeria’s largest order book in the international capital market and occurs as the Federal Government seeks to address its 2025 fiscal deficit and diversify its funding sources amidst ongoing fiscal and monetary reforms.

The Eurobond consisted of $1.25 billion maturing in 2036 and $1.10 billion maturing in 2046, with the 10-year note priced at 8.63 percent and the 20-year note at 9.13 percent.

According to the DMO, the sale attracted participation from investors across the United Kingdom, North America, Europe, Asia, the Middle East, and Nigeria, encompassing fund managers, pension and insurance funds, hedge funds, banks, and various other financial institutions.

The agency announced that the $13 billion order book is "the largest ever" recorded for Nigeria, indicating a robust demand from a diverse range of buyers. The notes are set to be listed on the London Stock Exchange, FMDQ Securities Exchange Limited, and the Nigerian Exchange Limited.

In a statement from the DMO, President Bola Tinubu remarked that the response from investors reflects ongoing confidence in the Nigerian economy and reinforces the nation’s credibility in the global debt markets.

"We are pleased with the strong investor confidence exhibited in our nation and our reform agenda. This development reaffirms Nigeria’s status as a recognized and credible player in the global capital market," Tinubu was quoted as stating.

Additionally, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, noted that the results highlighted international trust in the government’s reform initiatives and its commitment to maintaining fiscal stability.

DMO Director-General, Patience Oniha, stated that accessing long-term financing through the Eurobond market is in line with the strategy of fostering economic growth while alleviating the pressure on short-term domestic borrowing.

“Nigeria’s ability to access the Eurobond Market to raise long-term funding needed to support the growth agenda of President Bola Tinubu is a major achievement for Nigeria and is consistent with the DMO’s objectives of supporting development and diversifying funding sources,” Oniha said in the statement.

According to the Debt Management Office (DMO), the funds generated from the issuance will be allocated to cover the budget deficit for 2025 and fulfill other governmental financial requirements. The arrangement of the transaction was conducted by Chapel Hill Denham, Citigroup, Goldman Sachs, J.P. Morgan, and Standard Chartered Bank, who served as joint bookrunners, while FSDH Merchant Bank functioned as the financial adviser.

Nigeria last entered the Eurobond market in December 2024, successfully raising $2.2 billion. The recent issuance, accomplished in the context of stringent global credit conditions and increasing borrowing costs, indicates that the nation continues to have access to external financing despite the fiscal challenges it encounters.

According to investment firm CardinalStone, Nigeria’s foreign exchange reserves are anticipated to increase to $45 billion by the conclusion of 2025, propelled by robust investor confidence following the country’s successful $2.3 billion Eurobond issuance.

Additionally, it is projected that Nigeria’s year-end debt will escalate to N166.7 trillion, which represents 42.2 percent of the GDP. In a different evaluation, Comercio Partners characterized the success of the Eurobond as a “positive signal” regarding Nigeria’s fiscal prospects.

Nevertheless, it cautioned that these advancements could be jeopardized if instability in the exchange rate reemerges.

“On one hand, the inflow enhances external reserves, offers fiscal flexibility, and improves the government’s ability to meet short-term obligations. Conversely, it increases exposure to foreign exchange risk and amplifies interest burdens in hard currency,” Comercio Partners remarked.

Expert Opinions

Financial analysts have provided varied evaluations of Nigeria’s increasing dependence on Eurobond borrowing, cautioning that while these instruments facilitate rapid access to capital, they also entail costs and refinancing risks that could place pressure on government finances if not managed with care.

In response to the DMO's report indicating that Nigeria expended $2.93 billion on servicing Eurobonds over eight quarters—83 percent of which was allocated to interest—investment experts emphasized the necessity for the country to strike a balance between accessibility and long-term repayment obligations.

The Managing Director and CEO of Arthur Stevens Asset Management Limited, Olatunde Amolegbe, stated that Eurobonds will continue to play a role in Nigeria's financing strategy due to their rapidity and adaptability.

He pointed out that governments generally utilize a mix of debt options, clarifying that "there will always be a necessity to have a combination of debt instruments based on cost, timing, and execution speed."

Amolegbe remarked that Eurobonds are appealing because they represent "relatively straightforward sources of debt" and are typically devoid of the "onerous conditions" associated with multilateral loans, even when the latter may seem more economical.

He emphasized that borrowing is essential for nations with significant infrastructure demands, highlighting that Nigeria's focus should be on disciplined allocation and repayment capability. "Provided that these funds are utilized appropriately and we retain the capacity to fulfill repayment obligations, then it is not a major concern," he stated.

A Lagos-based economist, Adewale Abimbola, minimized the risks, contending that Nigeria has upheld a robust repayment record. He asserted, "I do not perceive any substantial risk. Nigeria has consistently met its Eurobond commit