Nigeria has accessed the first tranche of its $5 billion derivatives financing arrangement with First Abu Dhabi Bank (FAB), drawing about $1.5 billion under the deal approved by the National Assembly in March.
According to Bloomberg on Friday, the Federal Government received the funds within the past two weeks through a structured total return swap (TRS) transaction with the United Arab Emirates’ largest lender, citing people familiar with the matter.
On March 31, the National Assembly approved President Bola Tinubu’s request to secure up to $6 billion in external borrowing.
The borrowing plan comprised two facilities from the United Arab Emirates (UAE) and the United Kingdom (UK), including a structured TRS financing programme of up to $5 billion from First Abu Dhabi Bank.
Tinubu said the proposed borrowing would increase Nigeria’s public debt stock, which stood at $110.3 billion (about N159.2 trillion) as of December 31, 2025.
The drawdown comes despite concerns raised by Fitch Ratings over the financing arrangement.
Fitch warned that while such transactions can provide liquidity, diversify funding sources, and lower borrowing costs, they often fall outside conventional debt-reporting frameworks and could weaken transparency and legislative oversight.
The rating agency also said the structure could expose Nigeria to additional foreign exchange risks if domestic bond yields rise or the naira depreciates.
The International Monetary Fund (IMF) has also cautioned that derivative-based financing arrangements are often opaque and complex, making it difficult to assess the full extent of governments’ debt obligations.
