Nigeria Receives First Tranche of $5 Billion Swap from UAE Bank

Nume Ekeghe with agency reports

Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with the United Arab Emirates’ largest lender, according to a Bloomberg report, marking the first reported drawdown under a facility that has attracted scrutiny over its structure and transparency.

Bloomberg reported that Nigeria drew about $1.5 billion over the past two weeks through a Total Return Swap (TRS) transaction with First Abu Dhabi Bank PJSC, citing people familiar with the deal who requested anonymity because they were not authorised to speak publicly.

According to Bloomberg, “Nigeria has accessed the first tranche of a $5 billion derivatives deal with United Arab Emirates’ largest lender, pressing ahead with a transaction that has been scrutinised for being opaque.”

“The West African nation drew about $1.5 billion in the last couple of weeks from a total return swap transaction with First Abu Dhabi Bank PJSC, according to people familiar with the transaction, who asked not to be identified because they aren’t authorised to speak to the media.”

Efforts by THISDAY to independently confirm the reported drawdown from Nigeria’s Federal Ministry of Finance were unsuccessful. Calls and text messages sent to the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, were not responded to as of press time.

The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.

This transaction has, however, drawn attention from market participants because of the limited public disclosure surrounding its terms. The International Monetary Fund (IMF) and Fitch recently cautioned that while derivative-based financing can improve liquidity, such arrangements should be transparently managed to minimise fiscal and debt risks.

Meanwhile, the naira has remained relatively resilient, closing at N1,380.9 per dollar at the official market yesterday, compared with N1,380.1 per dollar the previous day, while holding firm at N1,390 per dollar on the parallel market for the third consecutive week.

Analysts attributed the resilience to strong macroeconomic fundamentals, healthy external reserves still on a steadily upward trajectory at $51.2 billion and sustained foreign portfolio investment inflows, despite mounting pressure from investors chasing dollar‑denominated assets, falling international oil prices and a pullback in the domestic equities market.

The naira has come under pressure in recent sessions as investors reposition ahead of the dollar‑denominated fundraising by Dangote Refinery and Petrochemicals, prompting a rotation of capital from naira assets into dollars.

At the same time, the Nigerian Exchange has witnessed increased profit‑taking, reflecting the shift in investor preference towards foreign currency assets.

The currency has also had to contend with a sharp decline in crude oil prices. Brent crude, which traded above $100 per barrel during heightened geopolitical tensions in the Middle East about a month ago, has retreated