Fitch Warns Nigeria on $5 Billion TRS Debt Risks

Fitch Ratings published a report on September 14, 2026, warning about the risks associated with Nigeria's $5 billion Total Return Swap (TRS) debt restructuring involving First Abu Dhabi Bank. The report, authored by analysts Gabriel Comolet and Todd Martinez, outlines concerns regarding transparency, liquidity management, and creditor recovery risks.

While TRS transactions can provide liquidity and alternative funding, they complicate the understanding of sovereign liabilities, especially during financial stress. Former World Bank President David Malpass commented on the potential for TRS structures to alter creditor hierarchy.

Fitch treats pledged bond collateral as a contingent liability, contrasting with the IMF's approach, which counts the full value of pledged bonds as part of the country's debt stock. The report builds on Fitch's earlier warning in June 2026 about Nigeria's proposed TRS transaction, emphasizing the need for sufficient disclosure of contractual terms to assess sovereign creditworthiness.