Nigeria’s Foreign Exchange Reserves Expected to Reach $45 Billion by 2025
Nigeria’s foreign exchange reserves are expected to grow significantly, reaching an estimated $45 billion by the end of 2025. This projection comes as a result of strong investor confidence following the successful issuance of a $2.3 billion Eurobond by the Nigerian government.
According to CardinalStone, a prominent investment house, the Eurobond was oversubscribed by a factor of 5.5 times, with total bids surpassing $12.7 billion. The overwhelming demand for the bonds indicates renewed optimism about Nigeria’s macroeconomic performance. The firm highlighted that this success is attributed to credit rating upgrades from major agencies, which have enhanced Nigeria’s credibility in the global debt market and reduced perceptions of sovereign risk.
The Eurobond features coupons of 8.62% and 9.13%, respectively. These rates were set based on the strong investor appetite observed during the auction. CardinalStone noted that the inflow from the Eurobond is expected to strengthen Nigeria’s external position and improve currency stability through reserve accumulation.
“This development bodes well for FX dynamics, particularly in supporting reserve accretion and naira appreciation,” the report stated. The firm also projected that Nigeria’s foreign exchange reserves will reach $45 billion by the end of 2025. It emphasized that the new Eurobond issuance does not change its debt outlook for the year, as the planned borrowing had already been factored into previous projections.
CardinalStone estimated that Nigeria’s year-end debt level would rise to N166.7 trillion (equivalent to 42.2% of GDP). The proceeds from the Eurobond are expected to be used for refinancing maturing Eurobonds worth $1.1 billion due on 21 November 2025 and addressing potential budgetary shortfalls.
Positive Signal with Potential Risks
Comercio Partners, another financial analyst, described the success of the Eurobond as a “positive signal” for Nigeria’s fiscal outlook. However, it warned that the benefits could be offset if exchange rate instability returns.
“The inflow boosts external reserves, provides fiscal breathing space, and enhances the government’s capacity to meet short-term obligations,” Comercio Partners said. “On the other hand, it raises exposure to foreign exchange risk and heightens interest burdens in hard currency.”
A renewed bout of FX volatility could undermine investor sentiment and increase 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 N152.40 trillion ($99.66 billion), with external debt at $46.98 billion (47%) and domestic obligations at $52.67 billion (53%), according to the Debt Management Office (DMO).
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 $1.118 billion Eurobond due in November 2025.
Challenges and Concerns
While Nigeria’s debt-to-GDP ratio remains below the 40% sustainability threshold, analysts have raised concerns about the high debt-service-to-revenue ratio, which exceeds 40%. This ratio continues to limit fiscal flexibility and increase vulnerability to external shocks.
The international bookrunners for the transaction included 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 $2.35 billion in foreign loans to finance the 2025 budget deficit and refinance maturing Eurobonds. Additionally, a $500 million sovereign Sukuk is set to be issued in the international capital market.