Climate change mitigation and adaptation in Nigeria has largely been financed by Federal Government as a
public sector. However, public sector funding of sustainable investment in green finance has been found inadequate and
insufficient to achieve Paris Climate Agreement in Nigeria. Therefore, this study examines the effects of catalytic firstloss capital on potential rise in private sector participation in the Nigeria green bond market. A simple random
sampling techniquewas utilized to select 90 registered Fund Managers in Nigeria. From the estimation results of probit
regression and conditional marginal effects, it was revealed that government grant and subordinated debt are
significant catalytic first-loss capital instruments that can increase the probability of private sector participation in the
Nigeria green bond market. The study, therefore, affirmed that both government grant and subordinated debt are
essential to stimulate private sector participation in Nigeria green bond market. The study recommends that
governments (both National and sub-Nationals) in Nigeria and Development Finance Institutions (DFIs) should
provide more sovereign grants and higher subordinated debts for listed companies that engage in green projects and
investments