Nigeria’s plans to issue Eurobonds this year, a key strategy to strengthen government finances, are facing significant uncertainties. Initially announced by Finance Minister Wale Edun in January, the issuance aimed to tap the international debt market if rates declined sufficiently.
However, market conditions and economic instability have cast doubt on the timeline. The last Eurobond sale in March 2022 raised $1.25 billion at 8.375%, but the current volatile state of the naira, low foreign reserves, and poor oil production complicate new issuances.
Since the naira was floated in June 2023, its value has dropped over 190%, causing foreign investors to hesitate. Despite occasional rallies, the currency’s instability remains a major concern. Analysts forecast the naira to stabilize at around N1,450 per dollar by year-end. The proposed domestic dollar bonds might further strain the naira, adding to the challenges in the fixed-income market.
Economic indicators paint a grim picture, with declining oil revenues and foreign reserves, which fell by 6.69% in a year to $32.7 billion as of May 2024. Efforts to boost non-oil exports and increase overall revenue have seen limited progress. The IMF projects Nigeria’s debt-to-GDP ratio to rise to 46.6% in 2024. While the country is not at immediate risk of default, significant fiscal reforms are needed to support sustainable growth.