Finance Minister says First Abu Dhabi Bank deal was approved by lawmakers and is designed primarily to refinance more expensive government debt……
The Federal Government has pushed back against calls for detailed disclosure of how it intends to spend funds accessed under its $5 billion financing arrangement with First Abu Dhabi Bank, with the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, insisting that the transaction has been subjected to unnecessary scrutiny.
Oyedele said on Wednesday that the facility followed due process, having received approval from the National Assembly, and was structured largely to help the government refinance more expensive debt and lower its overall borrowing costs.
The minister spoke in Abuja during a media briefing against the backdrop of growing attention surrounding the financing arrangement, particularly after the Federal Government recently accessed about $1.5 billion, representing the first drawdown from the facility.
The $5 billion Total Return Swap arrangement has attracted scrutiny from both local and international observers, including the International Monetary Fund and Fitch Ratings, which have raised concerns about the transparency and potential risks associated with the structure.
However, Oyedele questioned why the First Abu Dhabi Bank facility was being singled out when the government had other borrowing arrangements with institutions and investors.
Responding to a question on whether the government would publish details of how the money would be spent, the minister said public funds would be accounted for through the government’s broader expenditure reporting rather than through a special disclosure regime for the Abu Dhabi facility.
“We will not publish how we are spending it. We will publish how we spend government money. There’s nothing special about that loan,” Oyedele said.
He compared the facility with other sources of government financing, including loans from the World Bank, Eurobonds and Sukuk, questioning why the Abu Dhabi transaction should receive exceptional treatment.
According to him, the financing arrangement was not negotiated or obtained secretly, as the proposal was taken through the appropriate government approval process and eventually presented to the National Assembly.
Oyedele said the facility had been approved by the National Assembly on March 31, 2026, with the financing expected to support the 2026 budget, infrastructure requirements and the refinancing of existing debt obligations.
“The loan was approved not only by FEC, it was taken to National Assembly because what some people are doing is they comparing with other countries where they did it under the table,” he said.
“What else can be more public than what you gave to the National Assembly?”
The finance minister also explained why the government was not accessing the entire $5 billion facility at once.
According to Oyedele, taking the full amount immediately could leave the government paying financing costs on funds that had not yet been deployed.
He said the government was therefore accessing the facility in phases, depending on its financing needs.
“We’re assessing it in phases. You don’t want to take all the money at once because if you don’t spend it at once, you incur cost on the extra amount you’ve taken,” he explained.
Oyedele further argued that the structure should not be assessed in the same way as conventional fixed-rate government borrowing.
He noted that Nigeria had traditionally relied heavily on fixed-rate instruments, including Eurobonds, but said the First Abu Dhabi Bank arrangement offered a flexible interest-rate structure.
Under the arrangement, he explained, Nigeria’s financing cost could rise if interest rates increased, but the country could also benefit if rates declined.
“You need to understand the transaction. You know, there’s always the textbook analysis and there’s the real life of what you’re doing,” the minister said.
He pointed to Nigeria’s existing Eurobonds as an example of the limitations of fixed-rate borrowing, noting that some were issued when coupon rates were in double digits, while current yields had fallen considerably.
“So, we’re used to raising bonds on fixed interest rate terms. You see, I can tell you our Eurobond, for example, they were raised when the coupon was double digits. Today, our yield is down to around seven, 7.5 per cent,” he said.
Oyedele said the government could not directly benefit from falling market yields on debt that had already been issued at fixed rates.
He maintained that the Abu Dhabi facility provided greater flexibility because its rate could adjust in response to market conditions.
“This First Abu Dhabi Bank transaction is flexible rates. It means if rates go up, we pay more. If rates come down, we benefit more,” he said.
The minister added that the all-in cost of the facility was below the cost of Nigeria’s existing debt portfolio, making refinancing a central objective of the transaction.
“So the objective is to use it to refinance expensive debt so you can save money,” Oyedele said.
Despite the government’s defence of the arrangement, the financing structure has continued to attract attention from international institutions.
Under the deal, the Federal Government is required to pledge securities equivalent to about 133 per cent of the amount drawn as collateral.
The IMF has previously raised concerns about derivative-based financing arrangements such as total return swaps, particularly over the difficulty of tracking and valuing such obligations in real time.
Fitch Ratings has similarly warned that Nigeria’s planned $5 billion facility could introduce additional sovereign debt risks while raising questions about transparency in public debt reporting.
Oyedele, however, maintained that the government had carefully evaluated the arrangement before proceeding with the drawdown.
Rather than publish a special spending breakdown for the facility, he said the Ministry of Finance and the Debt Management Office would provide additional information to help the public understand how the transaction works.
He disclosed that frequently asked questions on the facility would soon be published on the websites of both institutions.
“In the next few days, you will see on the website both the Ministry of Finance and DMO the frequently asked questions about this particular debt or bond, just so everybody can please themselves,” he said.
The minister acknowledged the intense attention the transaction had received, including from international media, but maintained that there was nothing unusual about the facility.
“I spend time on it because I think it’s important and the international media also, for some reason, have taken so much interest in it. But that is what it is,” Oyedele said.
