Nigeria defends $5bn First Abu Dhabi Bank debt refinancing facility

Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has defended the government’s decision to utilize a $5 billion financing facility from First Abu Dhabi Bank (FAB). The government has already drawn an initial $1.5 billion tranche of the facility, which is structured as a Total Return Swap rather than a conventional loan and is backed by Nigerian government securities as collateral.

Oyedele explained that the facility is designed to refinance existing debt that was contracted at higher fixed interest rates. By using a flexible-rate arrangement, the government aims to benefit from declining interest rates, noting that the all-in rate for this transaction is lower than the existing debt portfolio.

Addressing calls for transparency regarding the specific spending of these funds, Oyedele stated that while the government publishes information on how public money is spent, it would not publish specific details of this particular facility. He argued that the transaction had already undergone due process and was approved by the National Assembly. The move comes despite expressed concerns from the International Monetary Fund and Fitch Ratings regarding the risks and transparency of such financing structures.