By Obinna Uballa
Nigeria has spent approximately $2.93 billion servicing Eurobond debt over eight quarters under President Bola Tinubu, raising concerns among analysts about the growing cost of commercial borrowing and the long-term sustainability of the country’s fiscal strategy.
Data from the Debt Management Office (DMO) covering Q3 2023 to Q2 2025 shows that Eurobond obligations alone accounted for 31.5 per cent of Nigeria’s total external debt service of $9.32 billion during the period. More alarmingly, $2.43 billion, or 83 per cent, of the amount spent went solely to interest payments, leaving only $500 million to reduce the principal.
“This pattern indicates that a significant portion of Nigeria’s external debt servicing is effectively going to fund interest rather than debt reduction,” said Dayo Adenubi, a finance professional and research analyst in a chat with Punch Newspaper. He warned that continued reliance on high-cost Eurobonds could lock Nigeria into a cycle of serial refinancing, similar to challenges faced by Ghana, Sri Lanka, and Kenya.
The structure of Eurobond repayments further compounds the issue. Q3 2023, the first full quarter under Tinubu, saw Nigeria pay $943.66 million, including $500 million in principal and $443.66 million in interest. This accounted for 67.8 per cent of the country’s total foreign debt service that quarter. While Q4 2023 provided temporary relief with $148.57 million paid entirely in interest, subsequent quarters witnessed repeated spikes, including $427.72 million in Q3 2024 and Q1 2025, reflecting the clustering of coupon payments and heavy reliance on commercial debt.
Eurobond debt as of June 2025 stood at $17.32 billion, representing 36.86 per cent of Nigeria’s total external debt – a rise from $15.62 billion in June 2023. The DMO estimates that Nigeria’s Eurobond exposure will continue to grow following a $2.35 billion dual-tranche issuance in November 2025, which attracted a record $13 billion in bids from international investors. The new Eurobonds, with 10- and 20-year maturities priced at 8.63 per cent and 9.13 per cent respectively, were intended to refinance maturing obligations and fund part of the 2025 budget deficit.
While government officials, including President Tinubu and Finance Minister Wale Edun, hailed the strong investor response as a sign of confidence in Nigeria’s economy and reform agenda, analysts warn that the short-term inflow does not offset long-term risks. “Eurobonds are easy to access, but they carry expensive interest and refinancing risk,” said Adenubi. “If projects financed by these bonds fail to generate expected returns, debt sustainability could be threatened.”
Other analysts, including Olatunde Amolegbe of Arthur Stevens Asset Management, noted that Eurobonds offer speed and flexibility, often without the conditionalities of multilateral loans. However, he stressed the need for disciplined deployment and repayment, saying, “Nigeria’s concern should be ensuring the funds are effectively used and repayment obligations are manageable.”
The high cost of interest payments, coupled with repeated refinancing, has led to warnings that Eurobond servicing could crowd out spending on development and infrastructure. The clustering of repayments in certain quarters amplifies fiscal pressure and exposes the economy to exchange rate and market risks.
While Nigeria’s recent currency recovery and strong investor appetite for Eurobonds may temporarily ease liquidity concerns, experts caution that long-term sustainability hinges on prudent debt management, careful project execution, and the avoidance of overreliance on costly commercial debt.
Nigeria’s Eurobond strategy, if not carefully managed, could become a persistent drain on public resources, limiting the government’s ability to fund critical infrastructure and social services while increasing vulnerability to external shocks.
