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Daniel Adaji
Investors are demanding higher returns to hold Nigeria’s Eurobonds, a clear warning sign of deepening concern over the country’s economic direction.
Data from the Debt Management Office (DMO), obtained by Pointblank News on Thursday, shows that yields on several of Nigeria’s dollar-denominated bonds have surged past 11%.
The 2051 Eurobond now yields 11.309%, up from 8.25% at issuance. The 2028 bond jumped from 6.125% to 9.881%. These elevated yields indicate that investors are demanding more compensation to hold what they see as increasingly risky Nigerian debt.
Yields rise when bond prices fall—typically a result of investors dumping the bonds or demanding higher returns due to heightened risk.
“The yield premium shows markets are nervous,” said a Lagos-based analyst. “They want more for taking on Nigeria’s debt.”
Nigeria’s macroeconomic indicators paint a troubling picture. Inflation is above 20%, the naira continues to lose value, and foreign reserves are shrinking. Efforts by the Central Bank of Nigeria (CBN) — including steep interest rate hikes and foreign exchange market reforms — have not reassured investors.
Oil, which accounts for more than 90% of Nigeria’s foreign exchange earnings, remains the economy’s cornerstone. But revenue from oil is unstable, and Nigeria has struggled to capitalize on previous oil booms. As debt servicing consumes a growing portion of revenue, the weakening naira makes dollar repayments even more expensive.
Eurobonds are international bonds denominated in a currency not native to the issuing country. For Nigeria, they are primarily dollar-based. These instruments provide critical access to global capital markets but come with exposure to foreign exchange risk. When the local currency depreciates, repaying foreign-denominated debt becomes more burdensome.
The DMO’s latest figures show a broad rise in bond yields across maturities. The 2049 Eurobond now yields 11.158%, up from 9.248% at issuance, underlining how investor confidence has waned.
Amid the market turbulence, Nigeria is taking steps to restore credibility. The country is in advanced talks with JP Morgan to re-enter its Government Bond Index — a critical benchmark that could unlock billions in passive investment inflows.
“With all the reforms that have taken place, particularly around FX, we have started engaging JP Morgan again to get back into the index. We think we are eligible now,” said DMO Director-General Patience Oniha during an investor session at the IMF/World Bank Spring Meetings in Washington, D.C.
Inclusion in the index, which Nigeria lost in 2015 due to capital controls and lack of FX market transparency, would signal investor approval of recent reforms. According to sources familiar with the talks, Nigeria could attract up to $2 billion in fresh inflows if it secures re-entry.
Nigeria joined JP Morgan’s Government Bond Index in 2012 after building a domestic bond market with active trading and committed market makers. But by 2015, FX illiquidity, opaque exchange rate practices, and the lack of a functional two-way market led to its removal.
In 2022, JP Morgan downgraded Nigeria’s sovereign debt outlook, citing missed opportunities during high oil prices and rising fiscal risks. More recently, in April 2025, the bank advised clients to cut exposure to Nigerian Open Market Operation (OMO) bills, citing global trade tensions and softening oil prices.
Nigeria stands at a crossroads. Without decisive reform, it risks being priced out of international credit markets. A return to the JP Morgan index could mark a turning point, but investors will want proof of commitment — not just promises.
The bond market has spoken loudly: Nigeria’s debt is risky, and the cost of borrowing will rise unless the country delivers stability, transparency, and credible fiscal policy. Investors aren’t waiting — and neither should Nigeria