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Nigeria Draws $1.5bn Tranche of $5bn Swap from FAB
June 29, 2026
Nigeria has drawn ~$1.5bn from the first tranche of a $5bn total return swap deal with First Abu Dhabi Bank (FAB), over the last couple of weeks. The country will provide naira-denominated securities as collateral at 133.3% of the loan value. The first tranche is priced at SOFR+395bp, stepping up to SOFR+400bp thereafter. Nigerian lawmakers described the terms as competitive when the deal was approved in April. The transaction has drawn scrutiny from the IMF, Fitch, and Moody’s due to its opacity and structural risks. The IMF flagged that parts of the deal could constrain monetary and exchange rate policy, while Fitch warned that margin calls payable in dollars against naira collateral could generate FX pressure if domestic yields rise or the naira weakens. Moody’s noted that such swaps introduce credit risks not present in traditional commercial borrowing. Proceeds will be used to refinance expensive existing debt and fund a budget deficit, with President Tinubu eyeing re-election in January 2027. Nigeria’s external debt stood at $51.9bn as of end-2025. FAB previously extended roughly $1.2bn to Nigeria for a coastal highway project linked to a Tinubu ally.
Nigeria’s dollar bonds were marginally down, with its 8.747% 2031s lower by 0.16 points to 106.9, yielding 6.9%
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