Nigeria’s foreign exchange reserves are projected to rise significantly to $45 billion by the end of 2025, following a surge of foreign inflows from the Federal Government’s recent $2.3 billion Eurobond issuance, according to a new report by CardinalStone Partners.
The financial advisory firm noted that the Eurobond boost to lift FX reserves stems from renewed global investor confidence in Nigeria’s fiscal reforms and economic stabilization policies under President Bola Tinubu’s administration.
Eurobond Boost to Lift FX Reserves and Strengthen the Naira
In its latest Macroeconomic Update, CardinalStone said Nigeria’s successful return to the international debt market recorded a 5.5x oversubscription, with bids totaling $12.7 billion — more than five times the offer size.
“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 report stated.
The Eurobond, which carries coupon rates of 8.62 percent and 9.13 percent, was described as a strong endorsement of Nigeria’s improving credit outlook.
According to the report, the positive response followed recent credit rating upgrades from international agencies, signaling reduced sovereign risk and increasing investor trust in Nigeria’s debt sustainability.
“The robust demand at the auction indicates that investors are confident in Nigeria’s macroeconomic narrative,” CardinalStone noted.
“This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation.”
Analysts Project FX Reserves to Reach $45bn
CardinalStone projected that the Eurobond boost to lift FX reserves will support the Central Bank of Nigeria’s efforts to stabilize the foreign exchange market.
“We project 2025 FX reserves to reach $45.0bn by the end of the year,” the report said.
“Importantly, the new Eurobond issuance does not alter our debt outlook for the year, as the planned borrowing was already factored into our projections.”
The firm added that part of the proceeds will be used to refinance maturing Eurobonds worth $1.1 billion due on November 21, 2025, while the rest will help bridge fiscal deficits in the federal budget.
CardinalStone also forecast that Nigeria’s total public debt will climb to ₦166.7 trillion, representing 42.2 percent of GDP by year-end — still below the sustainability threshold of 40 percent of GDP.
Comercio Partners: A Positive Signal With Caution
In a separate analysis, investment firm Comercio Partners described the successful Eurobond issuance as “a positive signal” for Nigeria’s external credibility and fiscal outlook.
However, the firm cautioned that sustained currency volatility could offset the gains from the Eurobond inflow.
“On one hand, the inflow boosts external reserves, provides fiscal breathing space, and enhances the government’s capacity to meet short-term obligations,” Comercio Partners noted.
“On the other hand, it raises exposure to foreign exchange risk and heightens interest burdens in hard currency.”
The firm warned that a renewed wave of FX instability could erode investor confidence and inflate Nigeria’s debt-service obligations, as a weaker naira increases the domestic cost of repaying dollar-denominated loans.
Nigeria’s Debt Profile and Reserve Outlook
Data from the Debt Management Office (DMO) shows that as of June 30, 2025, Nigeria’s total public debt stood at ₦152.40 trillion ($99.66 billion) — with external debt accounting for 47 percent ($46.98 billion) and domestic obligations at 53 percent ($52.67 billion).
The DMO confirmed that the proceeds from the Eurobond sale would be directed towards the 2025 federal budget and the refinancing of maturing external obligations, including the $1.118 billion Eurobond due in November.
“The Eurobond issuance enhances Nigeria’s foreign exchange reserves, stabilizes the naira, and supports liquidity in the foreign exchange market,” the DMO stated.
Experts Urge Fiscal Discipline and Policy Continuity
Economic experts have welcomed the Eurobond boost to lift FX reserves as a timely relief for Nigeria’s balance of payments position.
However, they caution that the benefits must be sustained through prudent fiscal management, export diversification, and continued monetary policy reforms.
A Lagos-based economist, Dr. Chijioke Umeh, said the Eurobond proceeds provide “temporary oxygen” for Nigeria’s FX market.
“While the Eurobond inflows will stabilize the reserves and ease FX pressure in the short term, the government must use this window to deepen domestic production, promote non-oil exports, and reduce import dependence,” Umeh advised.
He added that Nigeria must maintain policy consistency to reassure investors and prevent another cycle of capital flight.
Global Bookrunners and Local Participation
The international bookrunners for the Eurobond transaction included Citi (Billing and Delivery), Goldman Sachs International, J.P. Morgan, and Standard Chartered Bank, while Chapel Hill Denham acted 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 finance the 2025 budget deficit and refinance maturing Eurobonds, alongside a $500 million sovereign Sukuk to be issued in the international capital market.
With the Eurobond boost to lift FX reserves, Nigeria now has an opportunity to strengthen its external buffers, reduce exchange rate volatility, and restore investor confidence — but experts warn that the sustainability of these gains will depend on how effectively the funds are managed and reforms implemented.
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