The massive external debt burden of sub-Sahara Africa has gained widespread attention as a serious policy issue during the past few years. These countries are particularly vulnerable because: (a) they have large international borrowing requirements and the resulting external debt is denominated in different currencies; (b) their external debt is in obligation with variable interest rates; and (c) their trade in primary commodities is significant.  Yet a recent survey by the World Bank revealed that most borrowers in developing countries do not hedge their interest rate or exchange rate exposures. In general, the Third World lacks the expertise in the use of recently-developed hedging tools and the understanding of the risk structure of their economies. This paper develops a debt composition hedging strategy that minimizes Nigeria’s budget exposure to external price shocks. The survey should be useful to developing countries interested in hedging techniques to improve their credit ratings and limit the impact of volatility in global markets.