In the first half of 2025, Nigeria’s Eurobonds outperformed those of other African nations, recording the sharpest decline in yields—a sign of growing investor confidence. The average yield on Nigeria’s sovereign bonds dropped by 0.8 percentage points to 8.8%, down from 9.6% in the same period last year. This yield compression reflects heightened demand for Nigerian bonds, driven by structural reforms, improved credit ratings, and strengthening macroeconomic indicators.
Key contributors to this investor optimism include a more stable naira and moderating inflation. The local currency appreciated slightly to N1,530/$, marking a 0.4% year-to-date gain. Meanwhile, inflation cooled from 24.48% to 22.97% by May, signaling improved price stability. These improvements were further bolstered by the upgrade of Nigeria’s credit rating by Moody’s from Caa1 to B3, with a stable outlook, enhancing the country’s financial credibility.
Short-term Nigerian Eurobonds maturing in 2025 to 2029 showed the most dramatic yield declines, with the November 2025 bond dropping 201 basis points from 7.49% to 5.48%. This contrasts sharply with mid- and long-term bonds, which saw more modest decreases. These changes position Nigeria’s debt as a more attractive option for global investors compared to other Sub-Saharan countries.
In contrast, other African nations experienced mixed fortunes. While South Africa and Kenya saw minor yield drops, countries like Ivory Coast and Benin faced rising yields, reflecting increased market risk or investor caution. On the corporate side, average Eurobond yields in Africa rose by 20 basis points to 7.4%, indicating more skepticism toward non-sovereign issuers, although Ghana may benefit from favorable commodities and a stronger cedi in H2 2025.
Looking ahead, Nigeria aims to raise $3.2 billion in new funding through Eurobonds and multilateral sources. Analysts expect the positive momentum to continue, aided by potential inclusion in the JP Morgan Emerging Market Bond Index and stable carry trade conditions. Despite anticipated monetary policy easing, Nigeria’s improving macroeconomic backdrop and enhanced creditworthiness are expected to sustain investor appetite in the second half of the year.