Completed Commercial AidData Chinese Aid

ICBC contributes to $1.3 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2019/2020 crop season financing needs (Linked to Record ID#92558)

$68.42M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Ghana Cocoa Board (COCOBOD)
Country	Ghana
Start Date	Sep 13, 2019
End Date	Aug 04, 2028
Duration	3,248 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`92559`

Grant Description

In 2019, Bank of China and ICBC contributions to $1.3 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2019/2020 crop season financing needs, Ghana On September 13, 2019, a consortium of 19 financial institutions — including the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) — finalized a $1.3 billion receivables-backed trade finance facility (loan) agreement with Ghana Cocoa Board (COCOBOD), a state-owned enterprise and the world's second largest cocoa producer, for purchasing cocoa from farmers during the 2019/2020 crop season.

Participants in the loan syndicate included Coöperatieve Rabobank U.A., Ghana International Bank Plc, MUFG Bank, Ltd., Natixis, Nedbank Limited, London Branch, Societe Generale, Bank of China Limited, DZ BANK AG, Industrial and Commercial Bank of China Limited, Intesa SanPaolo S.p.A, Standard Chartered Bank, Commerzbank, Crédit Agricole CIB, Ecobank, Standard Bank, Sumitomo Mitsui Banking Corporation, AfrAsia Bank, Barclays Bank of Ghana, and Federated Project and Trade Finance Core Fund.

The borrowing terms included a 7-month repayment period, a 0.35% commitment fee, a 0.61% flat (upfront) fee, and an interest rate of LIBOR plus 55 basis points. The Government of Ghana issued a sovereign guarantee in support of the loan. The loan was also secured by (i.e. collateralized against) receivables from future cocoa sales contracts.

According to the Chief Executive of COCOBOD, Hon. Joseph Boahen Aidoo, this loan was repaid two months ahead of schedule.

📋 Staff Comments

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.
The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($68,421,052) across all 19 members of the syndicate, which implies that the total financial commitment from Chinese state-owned banks was $136,842,104 (BOC's contribution is captured via Project ID#92558 and ICBC's contribution via Project ID#92559).
Ghana’s cocoa production is regulated by the Ghana Cocoa Board (COCOBOD), an organization separate from the Ministry of Food and Agriculture that is wholly owned by the Government of Ghana. COCOBOD does not purchase any of the cocoa which is exported, but is responsible for assuring the quality of the product. To ensure the high quality of Ghana’s cocoa exports, the COCOBOD oversees horticulture practices and regulates the use of pesticides and fertilizer. In addition, COCOBOD sets the producer prices for cocoa farmers and, through a subsidiary, oversees the marketing of cocoa. The operations of the COCOBOD are funded through the receipt of a percentage of the revenue received from cocoa exports, but all profits after covering expenses are passed onto the Government of Ghana in the form of export taxes.
In August 2017, COCOBOD told the country’s parliament it was in financial distress due to obligations that included servicing China Eximbank loans for the Bui Dam Construction Project (captured via Project ID#183, ID#30801, ID#30709, and ID#30086).
The contractual terms outlined in a document to the Parliament of Ghana indicate that the security margin is the assignment of cocoa contracts for 110% of the facility amount.
The commitment fee is referred to in the source documentation as a ’35% on interest margin’. AidData has assumed that the 0.61% flat (upfront) fee is functionally equivalent to a management fee.

📚 Sources & References

COCOBOD SIGNS US$1.3 BILLION SYNDICATED LOAN FACILITY FOR 2020/2021 CROP SEASON
Ghana Cocoa Board - US$1,300 million pre-export receivables backed Trade Finance facility
REPORT OF THE FINANCE COMMITTEE ON THE TERMS OF RECEIVABLES-BACKED TRADE FINANCE FACILITY BETWEEN GHANA COCOA BOARD AND A CONSORTIUM OF BANKS AND FINANCIAL INSTITUTIONS Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.