The Federal Government paid $22.5 million in charges on its controversial $1.5 billion Total Return Swap financing from First Abu Dhabi Bank, FAB, in the second quarter of 2026, according to data from the Debt Management Office, DMO.
The payment represents 1.5 per cent of the amount drawn from the $5 billion financing programme secured with the United Arab Emirates-based bank.
An analysis of the DMO’s Actual External Debt Service Payments for April to June 2026 showed that the entire $22.5 million was recorded under “other charges”, with no principal or interest payment made on the facility during the quarter.
The DMO did not specify the nature of the charge, leaving unclear whether it represented arrangement, commitment, transaction or other fees associated with the swap.
Nigeria secured approval for the Total Return Swap programme of up to $5 billion with FAB as part of efforts to raise external financing for the 2026 budget and manage its debt obligations.
Under the arrangement, the Federal Government receives dollar financing while providing naira-denominated Federal Government securities as collateral.
The government drew the initial $1.5 billion in June, leaving $3.5 billion available under the approved programme. DMO data showed that the $1.5 billion remained outstanding as of June 30, 2026, and was classified under “Other Commercial” debt.
The facility differs from conventional Eurobond borrowing and has attracted scrutiny over its cost, collateral requirements and exposure to market movements.
The DMO has clarified that Nigeria did not pledge crude oil revenues, airports, seaports or other strategic national assets as collateral for the transaction.
Instead, the government provided naira-denominated Federal Government securities, with collateral of up to 133.3 per cent of the amount drawn.
This means the $1.5 billion drawdown could require securities valued at about $2 billion, depending on the applicable valuation.
The facility has a six-year tenor, with a break option after three years. The first drawdown was priced at SOFR plus 395 basis points, while subsequent tranches are expected to attract a spread of about 400 basis points.
Consequently, the interest payable by the Federal Government will fluctuate in line with movements in US short-term interest rates.
The $22.5 million charge was also significant compared with other miscellaneous costs on Nigeria’s external debt during the quarter.
DMO data showed that the country paid a total of $39.25 million in “other charges” across its external debt portfolio between April and June.
The FAB swap therefore accounted for approximately 57.3 per cent of all such charges recorded during the period.
