Nigeria taps FAB for first USD 1.5 bn under USD 5 bn financing agreement

Nigeria has drawn around USD 1.5 bn from a proposed USD 5 bn financing facility with First Abu Dhabi Bank (FAB), Bloomberg reports, citing people familiar with the transaction. The first tranche was accessed over the past two weeks through a total return swap.

REFRESHER- Nigeria’s National Assembly approved the USD 5 bn facility in April. The six-year agreement is priced at 395-400 bps over SOFR and backed by collateral worth 133.3% of the financing, making it cheaper than Nigeria’s eurobonds, whose 2034 notes were yielding close to 8%.

What the money is for: Nigeria plans to refinance costlier debt and fund infrastructure as lower oil prices and USD demand tighten financing conditions.

But the structure is under scrutiny. Limited disclosure around the swap’s terms has raised concerns from the likes of the IMF and Fitch over fiscal risk and foreign exchange pressures.

That marks a different approach from FAB’s earlier Nigeria financing. Earlier this year, it underwrote USD 626 mn of a USD 1.1 bn facility with Afreximbank for part of the Lagos-Calabar coastal highway, using an ICIEC credit-ins. wrapper to reduce sovereign-risk exposure.