Completed Mixed AidData Chinese Aid

CDB provides $1.5 billion loan to PDVSA for working capital purposes

$1.5M USD

Funder	China Development Bank (CDB)
Recipient Organization	Pétroleos de Venezuela S.A. (PDVSA)
Country	Venezuela
Start Date	Dec 14, 2014
End Date	Apr 23, 2033
Duration	6,705 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`58504`

Grant Description

CDB provides $1.5 billion loan to PDVSA for working capital purposes On December 17, 2014, China Development Bank (CDB) entered into a $1.5 billion pre-export finance (credit) facility with Petróleos de Venezuela, S.A. (PDVSA) for working capital purposes. The interest rate was set to LIBOR (0.343%) plus a 6.25% margin (6.593%).

Interest payments were to be made quarterly and the term of the facility was 36 months (final maturity date: 2017).

Payments under the facility could be made through the delivery of crude oil and related products -- at market prices -- to Zhenhua Oil (the oil exploration and production subsidiary of Chinese defense contractor Norinco).

As of December 31, 2015, $150 million had been amortized and the loan’s (principal) amount outstanding was $1.2 billion. As of December 31, 2016, the loan’s (principal) amount outstanding was $600 million.

📋 Staff Comments

Reuters reports that PDVSA paid off a $1.5 billion loan that it received in 2014 in December 2017, but it does not identify the source of the loan. This source may or may not be referring to the CDB loan that was issued in December 2014. This issue merits further investigation.
AidData assumes that the credit facility was fully drawn down by the borrower (based on Reuters reporting). Therefore, Project ID#58504 is not assigned to the umbrella category.
A pre-export finance (PXF) facility is an arrangement in which a commodity (e.g. oil) producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed.
The China-Latin America Finance Database, which is co-produced by the Inter-American Dialogue and Boston University’s Global Development Policy Center, does not capture this $1.5 billion loan from China Development Bank.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.

📚 Sources & References

Offers to Exchange
Petroleos de Venezuela Working Capital Facility 2015
China stays on the sidelines as Venezuela spirals downward
Global Cooperation Business
China-Latin America Finance Database, 2016 Consolidated Financial Statements
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