The Economist Intelligence has said that lower borrowing costs would encourage more Eurobond issuance in the New Year in the West African region.

This was disclosed in the EIU’s Financial Services Outlook 2025 titled ‘The Great Easing,’ which was released recently.

Part of the report read, “Falling interest rates will boost fixed-income markets and securities and the fund managers that handle these assets. Falling yields and, consequently, higher bond prices should lead to a bond market rally, making fixed income more attractive after years of underperformance. High-quality fixed income, including investment-grade corporate bonds, mortgage-backed securities, and emerging-market sovereign debt, are expected to offer strong returns. Rate cuts in 2025 will also propel bond flows to emerging markets, reversing the outflows triggered by rate rises in recent years.

“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. In the securities market, equities will be supported by earnings-driven growth, particularly in the US. Despite the limited potential for valuation expansion, earnings in US stocks should rise between the middle and end of the rate-cutting cycle.”

Also, EIU projects that digital wallets will be the fastest-growing instant payment method globally, and “the use of cash will continue to decline as payment innovation accelerates.

“Global and national regulators will continue to raise their climate finance targets in 2025. The World Bank intends to raise the climate finance component of its total financing to 45 per cent in 2025. The ECB will continue to implement its 2024-25 climate and nature plan, assessing and monitoring banks’ progress on integrating climate risks into their prudential frameworks. Large financial services companies in India will have to adhere to the climate risk disclosure plan in the 2025-26 financial year.”

In late November, Nigeria returned to the international bond market after a two-year hiatus to raise funds to finance the 2024 budget. The country raised $2.2bn in 6.5-year and 10-year Eurobonds with peak order books in excess of $9.0bn.

Commenting, following the successful pricing, the Minister of Finance and Coordinating Minister of the Economy, Mr. Olawale Edun, said it signposts increasing confidence in ongoing efforts of the President Bola Ahmed Tinubu administration to stabilise the Nigerian economy and position it on the path of sustainable and inclusive growth for the benefit of all Nigerians.

“The broad range of investor appetite to invest in our Eurobonds is encouraging as we continue to diversify our funding sources and deepen our engagement with the international capital markets,” he said.

According to the Governor of the Central Bank of Nigeria, Olayemi Cardoso, “This outcome underscores the growing confidence of investors and the resilience of the Nigeria credit and evidence of our improved liquidity position and continued access to international markets to support the financing needs of the government.”.

Commenting on the Notes’ pricing, the Director-General of the Debt Management Office, Patience Oniha, said, “With the successful pricing of the Notes on an intraday basis, Nigeria has registered a landmark achievement in the international capital market. The size of the order book was approximately 4.18x the offer amount, and the strong and diverse investor base helped to price the new 6.5-year at 9.625 per cent, while new 10-year notes were priced at 10.375 per cent. The DMO remains committed to maintaining transparency and open communication with investors and stakeholders and appreciates the continued confidence and support of the international and Nigerian investors who participated in the pricing.”

Besides Nigeria, a number of African countries are also raising money from the international debt market. Ivory Coast, Benin Republic, and Kenya issued $4.85bn worth of Eurobonds in the first quarter of 2024. The bond offerings were oversubscribed, indicating investors’ demand for riskier frontier market debt is back.

Senegal became the fourth sub-Saharan African nation to enter the Eurobond market this year, raising $750m in debt maturing in 2031.