Nigeria has secured the first $1.5 billion under its $5 billion financing programme with First Abu Dhabi Bank (FAB), the initial drawdown from a structured funding arrangement approved by the National Assembly earlier this year.
The funds were received within the past two weeks through a structured Total Return Swap (TRS) transaction with the United Arab Emirates’ largest lender, according to reports citing sources familiar with the transaction.
The financing forms part of the Federal Government’s broader external borrowing plan approved by the National Assembly on March 31 following President Bola Tinubu’s request to secure up to $6 billion in foreign financing.
The borrowing package includes the $5 billion structured financing programme with First Abu Dhabi Bank alongside additional financing arrangements involving the United Kingdom.
The Federal Government said the financing is intended to support fiscal operations and improve liquidity as authorities continue efforts to strengthen public finances amid persistent economic challenges.
President Tinubu had previously acknowledged that the external borrowing programme would increase Nigeria’s public debt, which stood at approximately $110.3 billion, equivalent to about ₦159.2 trillion, as of December 31, 2025.
The structured financing arrangement allows Nigeria to access international funding through derivative-based instruments rather than conventional sovereign debt issuance, providing an alternative source of financing that could potentially lower borrowing costs and diversify funding channels.
However, the transaction has attracted scrutiny from international financial institutions and credit rating agencies.
Fitch Ratings previously cautioned that derivative-based financing structures, while capable of improving liquidity and expanding funding options, may reduce transparency because they often fall outside traditional public debt reporting frameworks.
The rating agency also warned that the arrangement could expose Nigeria to additional foreign exchange risks if domestic bond yields increase or the naira weakens further against major international currencies.
Similarly, the International Monetary Fund (IMF) has advised governments to exercise caution when utilising complex derivative financing structures, noting that such transactions can make it more difficult to assess the full extent of sovereign debt obligations.
Analysts say the financing programme reflects Nigeria’s continued efforts to diversify its funding sources as the government seeks to bridge fiscal deficits, finance critical infrastructure and support economic reforms without relying exclusively on traditional Eurobond issuances or multilateral loans.
The successful drawdown of the first tranche signals continued investor confidence in Nigeria’s financing strategy despite concerns over debt sustainability and exchange rate volatility.
Market participants are expected to monitor subsequent drawdowns under the programme, as well as the government’s debt management strategy, to assess the long-term implications for Nigeria’s fiscal position and external debt profile.