FG paid $22.5m in charges on First Abu Dhabi Bank swap in Q2, Punch reports

The Federal Government paid $22.5m in charges on its $1.5bn financing arrangement with First Abu Dhabi Bank in the second quarter of 2026, according to a Punch analysis of Debt Management Office data.

The payment was recorded entirely as other charges in the DMO’s external debt service figures for April to June. No principal or interest payment was recorded on the Total Return Swap facility during that period.

The report did not specify what the charge covered. It therefore remains unclear whether the payment was for arrangement, commitment, transaction or other fees.

The $1.5bn was drawn in June from an approved financing programme of up to $5bn with the United Arab Emirates-based bank. Under the arrangement, Nigeria receives dollar financing and provides naira-denominated Federal Government securities as collateral. The DMO’s debt stock figures cited by Punch showed the $1.5bn remained outstanding on June 30.

The DMO has said the transaction does not pledge crude oil revenues, airports, ports or other strategic national assets. It has put the permitted collateral at up to 133.3 per cent of the amount drawn.

Punch reported that the facility has a six-year term, with a break after three years. The first drawdown was priced at the Secured Overnight Financing Rate, a US dollar interest-rate benchmark, plus 395 basis points, or 3.95 percentage points. Its interest cost therefore changes with the benchmark rate.

The $22.5m accounted for about 57.3 per cent of the $39.25m Nigeria paid in other charges across its external debt portfolio during the quarter, according to the newspaper’s analysis.

Nigeria also owed $1.87bn on a separate syndicated facility from the same bank at the end of June. Combined with the swap, that brought its outstanding exposure to First Abu Dhabi Bank to about $3.37bn.

The IMF has warned that such financing structures can create transparency and collateral risks. NaijaTrend previously reported that warning here. The DMO has defended the arrangement, saying it contains safeguards for exchange rates, interest rates, collateral valuation and refinancing.

Source: Punch