Nigeria draws $1.5bn from first tranche of $5bn First Abu Dhabi Bank financing deal

NIGERIA has received about $1.5 billion under the first drawdown of its $5 billion derivatives-based financing arrangement with First Abu Dhabi Bank (FAB), marking the initial disbursement from the facility approved by the National Assembly in March.

Bloomberg reported on Friday, citing sources familiar with the transaction, that the Nigerian government accessed the funds within the past two weeks through a structured total return swap (TRS) agreement with the United Arab Emirates’ largest lender.

The financing forms part of the external borrowing plan approved by the National Assembly on March 31 after lawmakers granted President Bola Tinubu authority to secure up to $6 billion in foreign loans.

READ ALSO: Confirmed: Nigeria, UK seal £746m deal to upgrade Lagos Ports

The approved borrowing package includes two financing facilities from the United Arab Emirates and the United Kingdom, with the largest component being the structured TRS programme of up to $5 billion provided by First Abu Dhabi Bank.

In seeking legislative approval for the loans, Tinubu noted that the additional borrowing would increase Nigeria’s public debt, which stood at $110.3 billion, equivalent to about N159.2 trillion, as of December 31, 2025.

The latest drawdown comes despite concerns raised by Fitch Ratings over the nature of the financing arrangement. The ratings agency said derivative-based transactions can improve liquidity, diversify funding sources and reduce borrowing costs, but warned that they often fall outside traditional debt-reporting frameworks, potentially reducing transparency and weakening legislative oversight.

Fitch also cautioned that the structure could expose Nigeria to greater foreign exchange risks, particularly if domestic bond yields increase or the naira weakens.

Similarly, the International Monetary Fund (IMF) has warned that derivative-based financing structures are often complex and opaque, making it more difficult to accurately determine the full extent of governments’ debt obligations.