Africa: EIU Forecasts Increased Eurobond Issuance in West Africa for 2025

The Economist Intelligence Unit (EIU) has projected a significant rise in Eurobond issuance across the West African region in 2025, driven by lower borrowing costs. This forecast was detailed in EIU’s recently released Financial Services Outlook 2025 report, titled “The Great Easing.”

Falling Interest Rates Boost Bond Markets

The report highlights that falling interest rates will invigorate fixed-income markets, making bonds more attractive after years of underperformance. According to the EIU, high-quality fixed-income assets, including investment-grade corporate bonds, mortgage-backed securities, and emerging-market sovereign debt, are poised to deliver strong returns.

The EIU noted, “Lower borrowing costs for emerging and developing economies will encourage more Eurobond issuance, especially in regions like West Africa, where issuance already rose in early 2024. Rate cuts in 2025 will also drive bond flows to emerging markets, reversing outflows caused by previous rate hikes.”

Broader Financial Trends

In addition to increased bond activity, the report anticipates several key trends for 2025:

• Digital Wallets: Predicted to be the fastest-growing instant payment method globally, with cash usage continuing to decline due to accelerated payment innovation.
• Climate Finance: Regulators are set to raise climate finance targets, with the World Bank increasing its climate finance share to 45% and the European Central Bank (ECB) monitoring banks’ integration of climate risks into their frameworks.

Nigeria’s Return to the International Bond Market

After a two-year absence, Nigeria re-entered the international bond market in late November 2024, successfully raising $2.2 billion in Eurobonds to finance the 2024 budget. The issuance comprised 6.5-year and 10-year tenors, with peak order books exceeding $9 billion.

Finance Minister Olawale Edun hailed the move as evidence of growing investor confidence in Nigeria’s economic reforms under President Bola Ahmed Tinubu. “The broad range of investor appetite to invest in our Eurobonds is encouraging as we diversify funding sources and deepen engagement with international capital markets,” Edun said.

Similarly, Central Bank Governor Olayemi Cardoso stated that the successful bond issuance reflects improved investor confidence in Nigeria’s credit and liquidity position.

Debt Management Office (DMO) Director-General Patience Oniha described the bond offering as a landmark achievement, noting that the order book was approximately 4.18 times the offer amount. The 6.5-year notes were priced at 9.625%, while the 10-year notes were priced at 10.375%.

Regional Momentum

Nigeria is not alone in leveraging international debt markets. Other African nations, including Ivory Coast, Benin Republic, and Kenya, raised $4.85 billion in Eurobonds in the first quarter of 2024, with all offerings oversubscribed. Senegal joined the trend by issuing $750 million in bonds maturing in 2031, becoming the fourth sub-Saharan African nation to access the Eurobond market in 2024.

The surge in demand for African sovereign debt signals renewed investor appetite for frontier market opportunities, further underscoring the positive outlook for the region’s financial landscape in 2025.