In a significant fiscal development, Nigeria allocated N611.71 billion in March 2025 to service its pioneering US dollar-denominated bond issued domestically, marking it as the largest single debt repayment item for the month, according to the Debt Management Office (DMO). This payment, representing 47% of March’s N1.3 trillion domestic debt servicing and nearly a quarter of the N2.61 trillion spent in Q1 2025, underscores the growing burden of foreign currency-linked debt amid a volatile naira.
Launched in August 2024 as part of a $2 billion Federal Government of Nigeria (FGN) bond program, the bond attracted over $900 million from local investors, achieving 180% oversubscription. Listed on the Nigerian Exchange and FMDQ Exchange, it earned the title of “West Africa Deal of the Year.” The bond’s design allows dollar-holding entities in Nigeria to invest without currency risk, while enabling the government to raise foreign exchange domestically, bypassing turbulent global markets.
The March payment included a $44.97 million interest component, converted at N1,511.80/$, equating to roughly N67.99 billion. The substantial remainder suggests a principal repayment of approximately N543.72 billion, a notable move just seven months after issuance. By March 2025, the bond’s outstanding value stood at N1.41 trillion, down from N1.47 trillion in September 2024, comprising 1.88% of Nigeria’s N74.89 trillion domestic debt.
While the bond strengthens Nigeria’s capital markets, its dollar denomination amplifies repayment costs when the naira weakens, a concern given the currency’s trading above N1,500/$. This fiscal strain, coupled with Nigeria’s rising public debt of N149.39 trillion as of March 2025, highlights the risks of foreign currency obligations. Policymakers must balance innovative financing with sustainable debt management to safeguard Nigeria’s economic stability.
