Firms Sit on ₦12.29 Trillion Debt Pile as CBN Rate Cuts Essential to Minimize Credit Risk

Nigerian firms are carrying trillions of naira in debt in their books, as a dovish stance by the central bank of Nigeria (CBN) as well as gradual economic recovery reduces refinancing risks for firms who need money to fund expansion plans.

“Certainly, lower interest rate would translate to lower debt service cost, all things being equal. Borrowers are either renegotiating or refinancing their loans at lower interest rates to reflect the new realities of declining yields in the market,” said Abiola Rasaq, Economist and former Head, Investor Relations and Portfolio Investments for United Bank for Africa (UBA).

As of the third quarter of 2025, non-financial corporate businesses held over N12.29 trillion in debt on their books, which is 13.19 percent lower than 2024’s N14.23 trillion, according to data gathered by MoneyCentral.

Investors still crave for corporate debt, as the value of new listings of commercial paper surged by 107 percent to N1.58 trillion, in the first seven months of 2025, according to data from FMDQ Financial Markets Monthly report.

There had been a slowdown in long-term capital raises in 2024 due to the aggressive hike in the interest rate by the central bank who sought to tame red-hot inflation.

However, as there has been relative stability in the foreign exchange market and gradual improvement in inflation numbers in 2025, the central bank has begun cutting interest rates, which is going to lower borrowing costs, and reduce refinancing risks for companies.

“I think while the long end of the yield curve is nearing equilibrium, there is still room for further moderation at the short end of the market, so as we see further moderation in interest rate, the appetite for debt financing is likely to increase, and corporates may increasingly tap the debt capital market to finance their capital projects, which require long tenured debt capital,” said Rasaq.

The Apex Bank has cut interest rates by 50 basis points to 27 percent in its first easing of policy since the Covid-19 pandemic.

Nigeria’s headline inflation rate eased to 18.02 per cent in September compared to 20.12 per cent in August 2025, indicating the sixth consecutive month of deceleration in inflation, according to data from the National Bureau of Statistics (NBS).

According to the National Bureau of Statistics (NBS), in Q2-25, the Nigerian economy grew by 4.23 percent year on year (yoy) in real terms. This marks an improvement from the 3.48 percent yoy growth recorded in Q2-24, and the 3.13 percent yoy growth observed in Q1-25, according to data from the NBS.

The yield on Nigeria 10Y Bond Yield held steady at 15.58% on November 11, 2025. Over the past month, the yield has fallen by 0.13 points and is 5.16 points lower than a year ago, according to over-the-counter interbank yield quotes for this government bond maturity.

Dangote Cement incurred total debt of N1.42 trillion as at September 2025, which is 45.05 percent lower than 2024’s N2.63 trillion.

Oando Energy’s total debts in the balance sheet increased by 1.10 percent to N2.80 trillion, reflecting increased drawdowns to support operational funding and capital projects, as well as the impact of naira depreciation on foreign currency-denominated obligations.

Airtel Africa’s total debts were up 1.33 percent to N3.29 trillion as at September 2025, as the telecoms giant has continued to improve its debt structure and continued with the debt localisation programme. The proportion of local currency debt (excluding lease liabilities) on its balance sheet increased to 95 percent as of 30 September 2025 from 89 percent a year ago.

Seplat Energy total debts increased by 166.44 percent to N1.09 trillion as at September 2025, as the oil and gas giant refinanced its existing $110 million senior RBL facility into a new 5 year $80 million RBL facility.

The new facility (Westport RBL facility) is supported by four lenders (previously three), and carries an interest rate of SOFR plus 6.5 percent for the first three years, increasing to SOFR plus 7.0 percent for the remainder of the term if more than 50 percent of the facility is drawn at that time.

MTN Nigeria total debts stood at N1.44 trillion as at September 2025, which is 203.35 percent higher than 2024’s N437.30 billion. The telecoms giant took facilities from Access Bank to tune of $66.69 million, which was arranged in 2024.

It took another $150 million loan from African Finance Corporation (AFC), and raised N200 billion bonds.

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