Beyond the Eurobond Success

Obinna Chima

This week has been a very busy one for Nigeria’s government officials and security agencies as they move to douse the tension created by United States President Donald Trump’s comment on the security situation in the West African country.

The development has seen top government officials engage stakeholders in the country, while also adopting back-channel negotiations in engaging the US government.

Trump, who last week designated Nigeria as a “Country of Particular Concern” over alleged widespread killings of Christians, rising religious intolerance, followed up this week with further threats of military action if the government fails to curb the violence.

However, President Bola Tinubu, in his response, had said Nigeria remains resolute in its fight against terrorism, despite diplomatic and political challenges.

“We will defeat terrorism in our country,” Tinubu added, signalling his commitment to national security and stability.

“The task ahead is immense, but we are resolved to move forward with unity and purpose, guided by renewed hope, an agenda to build a prosperous, inclusive, and resilient Nigeria,” he added.

But despite the political tension, the country’s return to the international capital market during the week was well received as its $2.35 billion Eurobond issuance attracted orders worth $13 billion, representing an oversubscription by 453 percent or $10.65 billion.

Nigeria successfully priced $2.35 billion Eurobonds maturing in 2036 (Long 10-year) and 2046 (Long 20-year) in the international capital markets, with US$1.25 billion and US$ 1.10 billion placed in the 2036 and 2046 maturities, respectively. The Long 10-year bond and the Long 20-year Notes were priced at Coupons/Yields of 8.625 per cent and 9.125 per cent, respectively, the statement added. The debt instrument attracted a wide range of investors from multiple jurisdictions, including the United Kingdom, North America, Europe, Asia, Middle East, and participation from Nigerian investors, which it viewed as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal and monetary management.

The transaction attracted a peak orderbook of over US$13 billion, marking the largest ever orderbook achieved by the Republic. This significant milestone underscores the strong support for the transaction across geography and investor class.

With respect to investor class, demand came from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions.

In financial markets, an oversubscription of this magnitude means investors see opportunity, not risk, in Nigeria’s story. The $13 billion orderbook highlights a reassessment of Nigeria’s creditworthiness, following recent fiscal and structural reforms.

But the fact remains that the main attraction to debt instruments issued by Nigeria and others in the frontier market category is the high-interest rate. The obvious is that returns in frontier markets have continued to outpace debts in developed economies. In addition to their absolute performance, frontier markets also offer significant diversification benefits to a global fixed income or multi-asset portfolio.

The federal government has already indicated that proceeds from the Eurobond will be used to help finance the 2025 fiscal deficit and improve foreign exchange liquidity. The fresh forex inflow is also expected to strengthen the naira exchange rate against the dollar and improve forex liquidity in the economy. Additionally, it is expected to boost Nigeria’s forex reserves’ accretion.

Nevertheless, the success of this Eurobond issuance must not become an excuse for complacency because Nigeria continues to struggle under the weight of insecurity and other macroeconomic challenges.

The real test lies in ensuring that borrowed funds are efficiently deployed toward productive investments that can stimulate growth, create jobs, and generate sustainable revenue. If the inflows are used judiciously, they could help fund infrastructure projects that improve competitiveness and boost export potential.

The government must rationalise expenditure by ensuring that every fund realised from this debt instrument is expended directly to productivity and growth. Wasteful spending on constituency projects and non-essential items, as we have seen in recent times, must give way to investments in human capital, infrastructure, and innovation.

This fresh borrowing should be tied strictly to projects that generate economic returns capable of repaying those debts. Borrowing to finance recurrent expenditure must also be avoided.

Beyond the Eurobond success, the spate of killings and displacement in some parts of the country has pivoted the world’s attention to the risk and fragility of Nigeria. There is therefore the need for the country’s security agencies to ensure that peace and stability are restored to troubled communities and for people to live without fear. The Nigeria we all want would be a mirage if good governance is not accorded its rightful place in addressing insecurity. Governance must focus on addressing the growing dissatisfaction, discomfort, and distress within the larger society, just as efforts must be made to abate corruption, tackle the country’s high unemployment rate, poverty and fix the country’s decaying infrastructure.

The federal government must also create a conducive environment to attract foreign direct investments, which are crucial to job creation, poverty reduction, and overall economic growth. Nigeria’s unfriendly business environment has been largely identified as one of the factors that discourages foreign investments. Without resolving the power sector crisis and guaranteeing that Nigerians have access to reasonably priced energy, the country cannot attract the much-needed FDIs, as businesses are forced to produce a sizable amount of their electricity due to challenges in the sector.

Additionally, the country’s business environment needs to be improved to encourage domestic businesses.

Therefore, beyond the fiscal implications, the successful Eurobond marks a psychological turning point. It shows that the international community still regards Nigeria as an important player among the frontier markets. It sends a message that, despite the noise of politics and security concerns, the fundamentals of Nigeria’s economy remain attractive.

The government must seize this moment to deepen reforms. That means ensuring transparency in fiscal operations, strengthening institutions, improving the business environment, and building investor confidence through consistency and accountability.