No Oil, Ports, Airports Pledged For $5bn FAB Facility — DMO

The Debt Management Office (DMO) has clarified that the Federal Government did not pledge oil revenues, ports, airports or other strategic national assets as collateral for its $5bn Total Return Swap (TRS) facility with First Abu Dhabi Bank (FAB).

The DMO, in a frequently asked questions document dated August 27, 2026, said the financing arrangement is secured exclusively by naira-denominated Federal Government of Nigeria (FGN) bonds.

The clarification comes amid growing public scrutiny over the structure of the dollar-denominated facility and concerns about whether Nigeria’s oil revenues or strategic assets were used to secure the financing.

According to the debt office, the collateral consists of domestic securities that remain within the government’s control and can be managed through the country’s fiscal and monetary policy instruments.

“No oil revenues or strategic assets, such as ports or airports, are pledged,” the DMO said.
Under the TRS arrangement, Nigeria pledges eligible naira-denominated FGN bonds to FAB in exchange for access to US dollar liquidity.

The structure provides the government with an alternative mechanism for raising foreign currency without issuing a conventional Eurobond in international capital markets.

The facility has a maximum size of $5bn and a tenor of six years, with a three-year break clause, according to the DMO.

The debt office said the collateral requirement is set at 133.3 per cent of the amount drawn, meaning Nigeria is required to provide naira-denominated securities worth approximately one-third more than the dollar liquidity it receives under the arrangement.

The DMO explained that the over-collateralisation provides a buffer against fluctuations in the value of the pledged securities before any additional margin requirement is triggered.

It added that the 133.3 per cent collateralisation ratio compares favourably with arrangements involving some comparable sovereign borrowers, which have required collateral of as much as 166.67 per cent .

“Comparable sovereigns have posted up to 166.67 per cent, so Nigeria’s 133.3 per cent reflects favourable terms,” the DMO said.

On the cost of the facility, the first tranche is priced at the Secured Overnight Financing Rate (SOFR) plus 3.95 per cent, while subsequent tranches will attract an interest rate of SOFR plus 4 per cent, according to the document.

The DMO said the TRS facility provides Nigeria with another avenue for accessing dollar liquidity, particularly during periods when international capital markets are volatile or when Eurobond financing becomes more expensive or difficult to access.

“It gives Nigeria faster access to dollar liquidity and remains available during periods of market volatility, when Eurobond markets can become more expensive or constrained,” the debt office said.

Unlike a conventional Eurobond transaction, under which the Federal Government raises funds by issuing debt directly to international investors, the TRS structure allows Nigeria to obtain dollar liquidity against pledged domestic securities.

The arrangement therefore provides the government with an additional funding channel while potentially reducing its dependence on international bond markets at a time when global borrowing costs and market conditions remain uncertain.

The DMO also said proceeds from the facility would be deployed to support budget implementation, finance priority infrastructure projects, refinance more expensive domestic and external obligations, and meet other urgent funding requirements approved by the President.

The agency said the transaction was structured to diversify the Federal Government’s funding sources and reduce reliance on any single financing market.

The clarification is expected to address concerns over the nature of the collateral backing the facility, particularly speculation that Nigeria’s oil revenues or strategic infrastructure had been pledged to secure the dollar financing.

By limiting the collateral to naira-denominated FGN bonds, the DMO said the government retains ownership and control of its strategic national assets and oil revenue streams, while using domestic securities as the principal security for accessing the foreign currency facility.

The $5bn maximum facility does not necessarily represent an immediate $5bn drawdown, as the government is expected to access the financing in tranches based on its funding requirements and the terms agreed with FAB.

The DMO maintained that the TRS is intended to strengthen Nigeria’s liquidity management and provide greater flexibility in meeting government financing obligations, particularly when conventional international borrowing channels become less attractive.