FG clarifies $5 billion Abu Dhabi swap, says no oil assets pledged

The Federal Government has defended its $5 billion Total Return Swap (TRS) facility with First Abu Dhabi Bank PJSC (FAB), saying no oil revenues or strategic national assets were pledged as collateral for the transaction.

The Debt Management Office (DMO), in a Frequently Asked Questions document issued on August 27, 2026, said the facility is secured by naira-denominated Federal Government of Nigeria (FGN) securities, with collateral valued at 133.3% of the amount drawn.

The DMO said the transaction, which has a maximum facility size of $5 billion and a six-year tenor, was approved by the Federal Executive Council (FEC) and the National Assembly.

What the DMO is saying

The government said the TRS allows Nigeria to obtain US dollar liquidity by pledging eligible FGN bonds, while paying interest based on the Secured Overnight Financing Rate (SOFR) plus an agreed margin.

The first tranche is priced at SOFR plus 3.95%, while subsequent tranches will attract SOFR plus 4%.

• “No oil revenues or strategic assets, such as ports or airports, are pledged,” the DMO said.

The facility will be drawn in phases rather than necessarily accessing the full $5 billion at once, the agency noted.

According to the DMO, the funds will be used for budget implementation, priority infrastructure, refinancing of relatively more expensive domestic and external debt and other critical financing needs approved by the President.

The DMO said a TRS provides an additional funding channel and can allow Nigeria to access dollar liquidity more quickly, particularly when international bond markets become volatile or expensive.

The DMO described the additional collateral as a risk buffer rather than a direct cost to the government. It also said the arrangement provides for monthly margining and a five-business-day cure period if the collateral falls below the required level.

Get up to speed

Several groups have criticized the Federal Government’s position on transparency regarding the $5 billion Total Return Swap (TRS) facility secured from First Abu Dhabi Bank.

In June, Nairametrics reported that Nigeria has accessed the first tranche of its $5 billion derivatives financing arrangement with the United Arab Emirates’ largest lender.

The first tranche is priced at 395 basis points above the Secured Overnight Financing Rate (SOFR), rising to SOFR plus 400 basis points thereafter.

What you should know

Nairametrics earlier reported that the IMF cautioned Nigeria over its plan to raise up to $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.

• The IMF said such financing structures are often complex and lack transparency.
• The Senate approved the Total Return Swap arrangement earlier this year to refinance costly debt and fund critical infrastructure.
• In December, the Federal Government also secured about $1.2 billion in financing from the UAE to support the construction of a key section of the Lagos-Calabar Coastal Highway.

According to the government’s reform scorecard, exchange-rate depreciation increased external debt servicing costs by N9.37 trillion, while higher interest rates added N1.24 trillion to domestic debt servicing expenses.