Nigeria’s foreign exchange reserves are projected to rise to $45bn by the end of 2025, driven by strong investor confidence following the country’s successful $2.3bn Eurobond issuance, according to investment house CardinalStone.

In its Macroeconomic Update released on the offering, the firm said the robust appetite for the Eurobonds, which recorded a 5.5x oversubscription, reflects renewed investor optimism about Nigeria’s macroeconomic trajectory.

“The Federal Government of Nigeria returned to the international debt market with a $2.3bn Eurobond offer. Investors’ appetite was strong, with total bids exceeding $12.7bn (excluding joint lead managers’ participation), translating to an impressive 5.5x bid-to-offer ratio,” the firm stated.

“Coupons of 8.62 per cent and 9.13 per cent were set, respectively. The robust demand at the auction indicates that investors are confident in Nigeria’s macroeconomic narrative. Credit rating upgrades from major agencies contributed to this confidence, reflecting a perceived decline in sovereign risk and a bolstering of the country’s credibility in the global debt market.”

CardinalStone projected that the Eurobond inflows will strengthen Nigeria’s external position and improve currency stability through reserve accretion.

“This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation,” the report noted.

“We project 2025 FX reserves to reach $45.0bn by the end of the year. Importantly, the new Eurobond issuance does not alter our debt outlook for the year, as the planned borrowing was already factored into our projections. We expect a portion of the proceeds to be channelled towards refinancing maturing Eurobonds of $1.1bn on 21 November 2025 and bridging potential budgetary shortfalls.”

CardinalStone estimated that Nigeria’s year-end debt level would rise to N166.7tn (42.2 per cent of GDP).

In a separate assessment, Comercio Partners described the Eurobond’s success as a “positive signal” for Nigeria’s fiscal outlook, though it warned that the gains could be undermined if exchange rate instability resurfaces.

“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 heightens interest burdens in hard currency,” Comercio Partners said.

“A renewed bout of FX volatility would not only undermine investor sentiment but also amplify Nigeria’s debt-servicing costs, as depreciation of the naira directly increases the domestic currency burden of external obligations.”

As of 30 June 2025, Nigeria’s total public debt stood at N152.40tn ($99.66bn), with external debt of $46.98bn (47 per cent) and domestic obligations of $52.67bn (53 per cent), according to the Debt Management Office.

The DMO confirmed that proceeds from the Eurobond sale will support the 2025 federal budget and refinance part of Nigeria’s maturing external obligations, including the $1.118bn Eurobond due in November 2025.

While Nigeria’s debt-to-GDP ratio remains below the 40 per cent sustainability threshold, analysts cautioned that the high debt-service-to-revenue ratio above 40 per cent continues to limit fiscal flexibility and heighten vulnerability to external shocks.

The international bookrunners for the transaction were Citi (Billing and Delivery), Goldman Sachs International, J.P. Morgan, and Standard Chartered Bank, with Chapel Hill Denham serving as the sole Nigerian bookrunner.

Last week, the National Assembly approved President Bola Tinubu’s request to raise $2.35bn in foreign loans to finance the 2025 budget deficit and refinance maturing Eurobonds, alongside a $500m sovereign Sukuk to be issued in the international capital market.