In a landmark move with far-reaching implications, the Federal Government of Nigeria spent a staggering N611.71 billion in March 2025 to service its first-ever domestic US Dollar-denominated bond, raising fresh concerns over the sustainability of Nigeria’s forex-linked debt obligations.
According to the Debt Management Office (DMO), this single bond repayment made up 23.44% of the total N2.61 trillion domestic debt servicing costs recorded in Q1 2025.
The bond, part of the $2 billion Domestic FGN US Dollar Bond Programme launched in August 2024, attracted over $900 million from local investors. It was the first foreign currency-denominated bond to be issued domestically and was oversubscribed by 180%, reflecting strong demand despite its risks.
The bond has since been listed on the Nigerian Exchange and FMDQ Exchange, and was named “West Africa Deal of the Year”, underscoring its significance in the regional financial market.
Per the DMO’s Q1 2025 debt service report, an interest payment of $44.97 million was due on March 6. At the prevailing exchange rate of N1,511.80/$, this amount converts to N67.99 billion. However, the DMO reported the actual naira outlay for the payment as N611.71 billion, sparking questions over the valuation or additional components of the debt service obligation.
Analysts warn that the steep cost reflects Nigeria’s increasing exposure to foreign currency risk, even within its domestic debt strategy. With exchange rate volatility persisting, stakeholders are calling for clearer communication from the DMO and greater transparency around debt structuring.
