Nigeria has accessed the first $1.5 billion from a $5 billion financing facility secured from the First Abu Dhabi Bank (FAB) as part of efforts to support the 2026 budget, finance major infrastructure projects and refinance existing debt.
The funding represents the first drawdown under a $5 billion Total Return Swap (TRS) arrangement approved by the National Assembly on March 31, 2026.
Lawmakers had previously described the financing terms as competitive after approving the facility in April. Under the agreement, the first tranche carries an interest rate of 395 basis points above the Secured Overnight Financing Rate (SOFR), while subsequent drawdowns will be priced at SOFR plus 400 basis points.
The latest financing expands Nigeria’s borrowing relationship with First Abu Dhabi Bank, which had earlier provided about $1.2 billion to support the construction of part of a major expressway project.
As part of the arrangement, Nigeria is expected to provide collateral worth 133.3 percent of the loan value in local currency-denominated assets.
The drawdown comes despite concerns raised by the International Monetary Fund (IMF) over the use of complex financing structures such as Total Return Swaps.
The IMF warned that such financial instruments can be difficult to assess because of their complexity and limited transparency, making it harder to fully evaluate the associated risks and long-term fiscal impact.
The Fund also cautioned that certain provisions within such agreements could potentially affect future monetary and exchange rate policy decisions.
According to the latest figures from the Debt Management Office (DMO), Nigeria’s external debt stood at $51.9 billion as of December 31.
