The Federal Government of Nigeria has finalized the first installment of a $5 billion Total Return Swap (TRS) facility with First Abu Dhabi Bank, the largest lender in the United Arab Emirates. Approved by the National Assembly on March 31, the transaction proceeds despite mounting transparency concerns from global financial institutions. The capital injection is designated to fund the 2026 fiscal budget, support critical infrastructure development, and reorganize existing debt obligations. Following legislative approval in April, lawmakers described the financing terms—which price the initial tranche at 395 basis points over the Secured Overnight Financing Rate (SOFR) and later tranches at SOFR plus 400 basis points—as highly competitive.
The agreement deepens Nigeria’s financial exposure to the UAE lender, which has already financed $1.2 billion toward a major national expressway project. Under the terms of the deal, Nigeria is backing the loan with a 133.3% collateral requirement denominated in local currency assets. This asset-backed structure drew scrutiny from the International Monetary Fund (IMF), with Mission Chief Christian Ebeke warning that Total Return Swaps are often complex and opaque, making risk exposure difficult to evaluate. The IMF further noted that certain elements of the deal could impose political constraints on Nigeria’s future monetary and exchange rate policies, as the country manages an external debt portfolio that stood at $51.9 billion at the close of last year.
