Nigeria’s debts to hit N155trn as Senate approves Tinubu’s request to borrow fresh $6bn
Nigeria’s debts to hit N155trn as Senate approves Tinubu’s request to borrow fresh $6bn
Nigeria’s total debt stock is set to rise to N155.1 trillion, following an additional $6 billion loan request by President Bola Tinubu, hurriedly approved by the Senate on Tuesday.
The $6 billion loan at an exchange rate of N1,400 per dollar, adds N8.4 trillion to the country’s debt stock which stood at N146.69 trillion at the end of 2025, to N155.1 trillion.
The approval for the $6 billion yesterday came barely three and half hours after the President of the Senate, Senator Godswill Akpabio, read the letter from the President, seeking the approval.
The letter was read the first time, scaled for a second reading, read the third time, and passed the same day by the senators.
The Senate approved the loans, following the presentation and consideration of the report by Senator Aliyu Wammakko, Chairman, Senate Committee on Local and Foreign Debts.
President Tinubu’s request to borrow an additional $6 billion was contained in two separate letters addressed to the President of the Senate, Senator Godswill Akpabio, read at plenary yesterday.
According to the President, the Senate should “Pursuant to Sections 21(1) and 27(1) of the Debt Management Office (Establishment, Etc.) Act, 2003, to: Approve the establishment of a structured Total Return Swap, TRS, derivative external financing programme of up to $5 billion with First Abu Dhabi Bank (FAB), United Arab Emirates; “ Approve the indicative Terms and Conditions of the facility, including collateralisation with Naira-denominated Federal Government of Nigeria Securities and margining obligations in USD; and Authorise the Federal Government to draw down the facility in tranches and issue FGN Securities as collateral.”
In the first letter read by Akpabio, President Tinubu requested the approval to establish a structured total return swap (TRS) external financing programme of up to $5 billion with First Abu Dhabi Bank of United Arab Emirates.
In the letter, President Tinubu, who noted that the facility would be made available to Nigeria in tranches, said: “The purpose of this letter is to request for the approval and resolution of the National Assembly pursuant to the provisions of section 21(1) and 27(1) of the Debt Management Office Establishment Act 2003 to establish a structured total return swap, TRS, derivative external financing programme from First Abu Dhabi Bank of the United Arab Emirates of up to $5 billion which will be made available to the Federal Republic of Nigeria in tranches.”
According to him, the proceeds will be used for budget implementation, development of priority infrastructure projects and repayment of relatively expensive domestic and external debts.
He added that the facility would also help the federal government meet urgent financial obligations when necessary.
The President said Nigeria’s total public debt currently stood at $110.3 billion, equivalent to about N159.2 trillion as of December 31, 2025.
He said the loan would be drawn in phases to reduce pressure on the country’s debt stock and servicing obligations.
In the second letter, Tinubu also asked the Senate to approve the issuance of naira-denominated Federal Government securities as collateral for the facility and the payment of margin obligations in US dollars.
In the letter, the President, who sought approval for a $1 billion United Kingdom, UK, export finance loan facility arranged by Citibank, London branch, said the loan would be used for the reconstruction and rehabilitation of Lagos Port complex and Tin Can Island Port.
The letter read: “The rehabilitation of the ports project is a strategic modernisation initiative of the Federal Government of Nigeria, through the Nigerian Ports Authority, to restore and upgrade two of Nigeria’s most vital ports, namely Tin Can Island Port complex and Lagos Port complex, Apapa, which have reached critical engineering failures.”
According to him, the project is aimed at addressing infrastructure deficiencies, improving port efficiency, enhancing safety standards and aligning Nigeria’s port facilities with global best practices.
Tinubu added that the rehabilitation would help sustain Nigeria’s competitiveness as a maritime hub and support non-oil trade diversification.
Immediate C’ttee’s oversight
Akpabio subsequently referred the requests to the Senate Committee on Local and Foreign Debts, led by Senator Aliyu Wammakko, APC, Sokoto North, to carry out legislative actions on the request and report back immediately.
In his presentation, Senator Wammakko said: “The proposed financing is structured as a Total Return Swap, TRS, a derivative-based instrument governed by International Swaps and Derivatives Association, ISDA, rules.
“The facility provides access to up to $5 billion, to be drawn in tranches, thereby allowing flexibility in utilisation and limiting immediate fiscal pressure. The transaction is collateralised by Naira-denominated FGN Securities at 133.3%, representing over-collateralisation to mitigate lender risk.
‘’The securities will be marked-to-market monthly, and any shortfall will require margin calls in USD cash, while excess collateral will be returned to the Federal Government.
“The facility has a tenor of six years, with a three-year break clause and annual rollover provisions subject to mutual agreement.
“The indicative pricing of the facility is SOFR +3.95% for the first tranche and SOFR + 4% for subsequent tranches, which is considered competitive relative to prevailing Eurobond yields for Nigeria. An arranger fee of 1.5% flat per tranche is payable upfront.
“The committee notes that the pricing reflects Nigeria’s current sovereign risk profile and compares favourably with alternative external borrowing options.”
On use of proceeds, the committee said: “The proceeds of the facility are intended for: budget implementation, financing critical infrastructure projects, refinancing more expensive domestic and external debt, addressing urgent fiscal and liquidity needs
“In addition, 40% of the said fund will be used to fund the capital projects in the 2025 and 2026 budgets. The committee notes that these uses are consistent with national development priorities and fiscal consolidation objectives.”
On the impact on public debt and sustainability, Wammakko said: “The facility will be reflected in Nigeria’s external debt stock as it is drawn, thereby increasing total public debt.
“As at December 31, 2025, Nigeria’s total public debt stood at approximately $103.20 billion (N146.69 trillion). The committee observes that Nigeria’s debt-to-GDP ratio of 36.92% remains within the 60% threshold approved by the Federal Executive Council and the 80% benchmark advised by international financial institutions.
“The phased drawdown structure helps to moderate the impact on debt stock and debt service obligations.
“Debt service-to-revenue ratio remains a concern (estimated at about 60%), underscoring the need for prudent debt management and enhanced revenue mobilisation, which we believe should improve as revenues of the government improve with the new tax reforms.
“The committee notes several advantages of the proposed TRS structure; immediate access to foreign currency liquidity without issuing new Eurobonds, thereby avoiding additional pressure on international capital markets.
“Flexible drawdown in tranches, enabling efficient cash flow management and reduced exposure.
“Strengthening bilateral financial relations with a major Gulf financial institution, enhancing Nigeria’s global financing options. Potential refinancing of expensive debt, thereby improving the overall cost profile of public debt.
“Embedded dispute resolution and valuation safeguards, which provide protection to the FGN in the execution of the transaction. Risks and Mitigating Factors. Currency Risk: Margin calls in USD may arise due to exchange rate volatility, Mitigation: Conservative collateralisation and phased drawdowns
“Market Risk: Fluctuations in the value of FGN securities used as collateral.”
