Nigeria is taking significant steps toward re-entering the international debt market as the Debt Management Office (DMO) begins preparations for the country’s first Eurobond sale since November 2025. The agency has invited financial and legal firms to submit expressions of interest to serve as transaction advisers for the planned issuance, signaling the government’s intention to tap global investors once market conditions become favorable. The move comes after Nigeria largely stayed away from international borrowing over the past two years due to high global interest rates and challenging financial conditions.
The planned Eurobond issuance is expected to play a crucial role in financing the country’s 2026 budget, refinancing existing debt obligations, and supporting key infrastructure projects. Government officials believe improving economic reforms, exchange rate adjustments, and efforts to stabilize the economy have helped restore investor confidence in Nigerian assets. As a result, international lenders and portfolio investors are increasingly showing renewed interest in the country’s sovereign debt instruments.
Market analysts say the appointment of advisers is a routine but important step that enables the government to move quickly when borrowing conditions improve. With global borrowing costs beginning to ease and several frontier economies successfully returning to international bond markets, expectations are growing that Nigeria could soon follow suit. Officials have also highlighted growing access to bilateral and multilateral funding sources, although Eurobonds remain a critical financing tool for securing long-term capital and managing debt obligations.
While Nigeria prepares for a return to the global market, domestic borrowing activity continues to increase. According to a report by Coronation Research, sovereign bond yields are likely to remain elevated through the third quarter of 2026 as investors respond to rising government borrowing requirements, persistent inflation, and tight monetary policy. The Federal Government recently doubled its June bond offer to N1.2 trillion from N600 billion, a move analysts describe as a clear indication of increasing financing needs. Despite the larger offer, investor appetite remained strong, with subscriptions rising to N1.41 trillion, driven largely by pension fund administrators and other institutional investors.
However, concerns remain over inflationary pressures and future borrowing levels. Headline inflation climbed to 15.93 percent in May, marking the third consecutive monthly increase and weakening expectations of near-term interest rate cuts. Coronation Research noted that the Federal Government has already raised approximately N19.03 trillion through Treasury bills and bond issuances this year, representing more than 65 percent of its domestic borrowing target. With a projected fiscal deficit of N31.46 trillion, analysts expect borrowing activity to remain high, keeping bond yields within the 17.5 percent to 19 percent range unless inflation eases or monetary policy conditions change unexpectedly.
source: Business day
