Nigeria Eurobond debt hits $2.93bn in servicing as interest dominates repayments, raising concerns over fiscal pressure and long-term borrowing risks

Nigeria Eurobond debt has climbed sharply as the Federal Government spent about $2.93bn servicing Eurobond obligations across eight quarters under President Bola Tinubu, according to an analysis of external-debt data released by the Debt Management Office.

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The records covering Q3 2023 to Q2 2025 show that Eurobond repayments accounted for 31.5 per cent of the country’s $9.32bn external-debt service during the period.

A striking revelation is that $2.43bn out of the $2.93bn spent on Eurobonds went strictly to interest, meaning 83 per cent of servicing costs did not reduce the principal.

This underscores the painful reality of costly commercial borrowing, a growing fiscal burden that is beginning to limit government policy space.

Tinubu’s first full quarter in office, Q3 2023, was the most expensive, with Nigeria paying $943.66m on Eurobond obligations, including a $500m principal redemption.

Eurobonds made up 67.8 per cent of the entire external-debt bill that quarter, the highest share in the two-year window.

The following quarter, Q4 2023, saw a drop to $148.57m since no principal was due. Eurobond payments represented just 15.8 per cent of total external-debt servicing, a temporary relief that faded quickly as interest obligations surged again.

In Q1 2024, the government paid $282.57m in interest alone, followed by $293.73m in Q2 2024. Both quarters showed a renewed climb in commercial-debt costs, even without maturing principal.

A sharp rise returned in Q3 2024, when Eurobond servicing hit $427.72m, accounting for nearly one-third of the national foreign-debt bill. The pattern repeated in Q1 2025, reaching the same level of $427.72m.

By Q2 2025, Eurobond costs eased marginally to $260.07m, still entirely interest. Across all eight quarters, Eurobonds consumed between 13.8 per cent and 67.8 per cent of Nigeria’s external-debt servicing.

Further review of DMO data shows the Eurobond stock rose from $15.62bn in June 2023 to $17.32bn in June 2025, a 10.88 per cent increase. This expanding exposure mirrors the government’s growing reliance on high-interest commercial loans.

In September, the Federal Executive Council approved plans to raise $2.3bn in new Eurobond issuances as part of the 2024–2025 borrowing plan, with an additional $1.1bn allocated to refinancing maturing debt.

In November, Nigeria successfully raised $2.35bn from global investors through a dual-tranche Eurobond offer that attracted a record $13bn in bids.

According to the DMO, the offer comprised $1.25bn due in 2036 at 8.63 per cent and $1.10bn due in 2046 at 9.13 per cent. The agency described the subscription level as the largest in Nigeria’s history, a signal of strong investor appetite.

President Bola Tinubu said the oversubscription demonstrated global confidence in the Nigerian economy. Finance Minister Wale Edun added that the outcome confirmed international trust in the government’s reform agenda.

DMO Director-General Patience Oniha noted that tapping the Eurobond market aligned with the long-term funding strategy aimed at supporting economic growth.

Financial analysts expressed mixed reactions. Olatunde Amolegbe, Managing Director of Arthur Stevens Asset Management, argued that Eurobonds remain attractive because they are easily accessible and free of stringent multilateral-loan conditions.

He emphasised that debt becomes problematic only when mismanaged.

Economist Adewale Abimbola downplayed risk concerns, stating that Nigeria has maintained a strong repayment record. He noted that commercial borrowing remains useful as long as exchange-rate and interest-rate exposures are controlled.

However, research analyst Dayo Adenubi issued a more cautious warning. He described Eurobonds as market-driven, fast, but expensive financing instruments that delay principal repayment until maturity.

He warned that countries risk severe distress if projects financed by Eurobonds fail to generate expected returns, citing Ghana, Sri Lanka, and Kenya as cautionary examples.

As Nigeria continues to navigate tight global financial conditions, experts say prudent management will be crucial to prevent rising commercial-debt exposure from overwhelming fiscal stability.

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The burden of Nigeria Eurobond Debt is expected to remain significant in the years ahead unless the country deepens reforms and improves revenue generation.