FG Defends $5bn First Abu Dhabi Bank Deal Amid Transparency Concerns

The Federal Government has defended its $5bn financing arrangement with First Abu Dhabi Bank, dismissing concerns over transparency and insisting that the facility was approved by the National Assembly and structured to refinance more expensive debt.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Wednesday during a media briefing in Abuja.

The government recently drew about $1.5bn, representing the first tranche of the $5bn Total Return Swap facility arranged with First Abu Dhabi Bank.

The facility was approved by the National Assembly on March 31, 2026, with the initial drawdown expected to support the 2026 budget, infrastructure projects and refinancing of existing debt obligations.

Oyedele said the government would not publish specific details on how the funds from the facility would be spent, arguing that there was nothing unusual about the transaction.

“We will not publish how we are spending it. We will publish how we spend government money. There’s nothing special about that loan,” he said.

The minister questioned why the First Abu Dhabi Bank facility had attracted particular scrutiny compared with other government financing arrangements, including loans from the World Bank, Eurobonds and Sukuk.

He also rejected suggestions that the transaction was conducted without due process, noting that it was considered by the Federal Executive Council and presented to the National Assembly.

“The loan was approved not only by FEC, it was taken to National Assembly because what some people are doing is they comparing with other countries where they did it under the table,” Oyedele said.

“What else can be more public than what you gave to the National Assembly?”

Oyedele said the government would draw funds from the facility in phases to avoid incurring financing costs on money that had not yet been deployed.

“We’re assessing it in phases. You don’t want to take all the money at once because if you don’t spend it at once, you incur cost on the extra amount you’ve taken,” he said.

He explained that the facility differs from Nigeria’s conventional fixed-rate borrowing because it carries a flexible interest rate.

According to him, the structure means Nigeria could benefit if interest rates decline, although borrowing costs would increase if rates rise.

Oyedele said Nigeria’s existing Eurobonds were issued when coupon rates were in double digits, while current yields had fallen to about 7–7.5 per cent.

“This First Abu Dhabi Bank transaction is flexible rates. It means if rates go up, we pay more. If rates come down, we benefit more,” he said.

He added that the all-in rate for the facility was lower than the government’s existing debt portfolio.

“So the objective is to use it to refinance expensive debt so you can save money,” he said.

The financing arrangement has attracted scrutiny from the International Monetary Fund and Fitch Ratings over its structure, transparency and potential implications for Nigeria’s sovereign debt.

The IMF had warned that derivative financing structures such as Total Return Swaps could be difficult to track and value in real time, potentially making a country’s financial obligations less transparent.

Fitch Ratings also warned that the $5bn arrangement could increase Nigeria’s sovereign debt risks and reduce transparency in public debt reporting.

Under the arrangement, the Federal Government is required to pledge securities worth about 133 per cent of the amount drawn as collateral.

Oyedele, however, maintained that the government had carefully assessed the financing structure before accessing the facility.

The minister said the Ministry of Finance and the Debt Management Office would publish frequently asked questions on the transaction to provide further clarification.

“In the next few days, you will see on the website both the Ministry of Finance and DMO the frequently asked questions about this particular debt or bond, just so everybody can please themselves,” he said.