The Federal Authorities spent N611.71 billion in March 2025 servicing its first-ever US dollar-denominated bond issued throughout the home market, making it the one largest home debt service merchandise for the month and highlighting the rising price of FX-linked obligations in Nigeria’s debt profile.
This was disclosed within the Debt Administration Workplace (DMO)’s newest report on precise home debt service for Q1 2025.
The report reveals that the March cost accounted for 47.05% of the overall N1.3 trillion spent on home debt servicing that month and 23.44% of the N2.61 trillion complete spent in your complete first quarter.
The greenback bond, launched in August 2024 below the $2 billion Home FGN USD Bond Programme, raised over $900 million from native traders, changing into the primary of its form to be issued in overseas foreign money inside Nigeria.
It was 180% oversubscribed and later listed on each the Nigerian Alternate (NGX) and FMDQ Alternate. The deal was additionally awarded the “West Africa Deal of the 12 months.”
In line with the DMO, the curiosity cost of $44.97 million was due on March 6 and was transformed at an official alternate fee of N1,511.80/$, which quantities to roughly N67.99 billion. Nonetheless, the DMO reported a complete of N611.71 billion as debt service price for the bond in March.
The discrepancy means that the federal government could have redeemed a part of the bond’s principal—estimated at N543.72 billion—alongside the curiosity cost, bringing the overall to N611.71 billion. If confirmed, this might mark a major principal compensation solely seven months after the bond’s issuance.
What you must know
As of September 30, 2024, the bond added N1.47 trillion to the home debt inventory of N69.22 trillion, accounting for two.12% of the overall. By March 31, 2025, the excellent quantity had declined to N1.41 trillion, representing 1.88% of the revised complete home debt of N74.89 trillion.
- Whereas the bond has been praised for deepening Nigeria’s capital markets and offering an alternative choice to Eurobond issuance, it introduces appreciable alternate fee danger.
Though raised domestically, the bond is dollar-denominated and subsequently imposes a heavier compensation burden in naira phrases each time the native foreign money depreciates.
- With the naira buying and selling above N1,500/$, such devices inflate the federal government’s debt servicing prices, even within the absence of recent exterior borrowing.
- The greenback bond servicing alone eclipsed a lot of the curiosity funds made on all different home devices in March 2025.
The home greenback bond was created to supply a protected and tax-free funding avenue to dollar-holding entities in Nigeria whereas serving to the Federal Authorities increase overseas alternate with out tapping risky worldwide markets.
- Nonetheless, the March 2025 compensation determine highlights the monetary weight of servicing such debt below an unstable foreign money regime.
The outsized price of servicing this single instrument has renewed concentrate on Nigeria’s rising publicity to FX-denominated liabilities, particularly these tied to risky alternate charges. Though issued domestically, the greenback bond provides stress to Nigeria’s fiscal steadiness, given the weakening of the naira and rising exterior debt service obligations.
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