The Economist Intelligence Unit (EIU) has predicted that lower borrowing costs will drive an increase in Eurobond issuance in West Africa in the coming year. This forecast was part of the EIU’s Financial Services Outlook 2025, titled The Great Easing, which was recently published.
The report states, “Falling interest rates will stimulate fixed-income markets and securities, benefiting the fund managers handling these assets. As yields decrease and bond prices rise, a bond market rally is expected, making fixed income more appealing after years of underperformance. High-quality fixed-income options, such as investment-grade corporate bonds, mortgage-backed securities, and emerging-market sovereign debt, are forecast to offer strong returns. Additionally, rate cuts in 2025 are anticipated to boost bond flows to emerging markets, reversing the outflows seen in recent years due to previous rate hikes.”
The report also highlights that lower borrowing costs for emerging and developing economies will encourage more Eurobond issuance, particularly in regions like West Africa, where Eurobond issuance already increased in early 2024. In the securities market, equities are expected to benefit from earnings-driven growth, especially in the US. Although the potential for valuation expansion is limited, US stock earnings are projected to rise through the latter part of the rate-cutting cycle.
Furthermore, EIU projects that digital wallets will become the fastest-growing method of instant payments globally, with cash usage continuing to decline as payment innovations accelerate. It also forecasts that both global and national regulators will raise their climate finance targets in 2025. The World Bank plans to increase the climate finance component of its total financing to 45% by 2025, while the European Central Bank (ECB) will continue to implement its 2024-25 climate and nature plan, assessing how banks integrate climate risks into their prudential frameworks. Additionally, large financial services companies in India will be required to comply with climate risk disclosure regulations in the 2025-26 financial year.
In late November, Nigeria made a return to the international bond market after a two-year absence, raising $2.2 billion in 6.5-year and 10-year Eurobonds, with demand exceeding $9.0 billion.
Following the successful bond issuance, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, noted that the transaction reflects growing confidence in the efforts of President Bola Ahmed Tinubu’s administration to stabilize Nigeria’s economy and position it for sustainable, inclusive growth that benefits all citizens.
