According to the Debt Management Office’s (DMO) recent quarterly report on Nigeria’s public debt stock, focusing on the Federal Government of Nigeria’s (FGN) external debt servicing costs for Q2 2025. The external debt service payments amounted to US$932.1m. This implies quarter-on-quarter (QoQ) and year-on-year (YoY) declines of -33% and -17%, respectively. A further breakdown of the external debt service stock reveals that US$670.6m was attributed to non-market-related debt obligations, accounting for c.72% of the total debt payments. Market-related debt service payments accounted for the remaining US$261.6m.
- The significant share of non-market-related debt service costs within the overall external debt stock highlights the FGN’s preference for concessional loans due to their lower interest rates and longer tenors compared with commercial debt.
- The QoQ reduction reflected a 39% QoQ decline in market-related debt service payments, largely due to interest payments on Eurobonds, amounting to US$167.7m.
- Interest and fee payments (excluding principal repayments) totalled US$1.9bn over the twelve months to June 2025, implying an annualised average interest rate of approximately 4%.
- On a cumulative basis, the FGN’s external debt service payments stood at US$2.3bn over the 6M 2025 period, representing a modest YoY increase of 4%.
- In terms of split, total external debt servicing costs comprised US$1.6bn in non-market-related payments and US$693m in market-related payments.
- Looking ahead, the FG intends to return to the international debt market later this year to capitalise on easing global financial conditions in order to finance its budget deficit and to refinance the US$1.1bn Eurobond maturing this month.
- However, these plans face significant challenges from prevailing risk-off sentiment, driven by recent global developments that have unsettled investor confidence.
Source: Proshare.co
