Overview

CDB provides $500 million loan to PDVSA for purchasing oil drilling equipment (Linked to Record ID#38053, #38055)

Commitments (Constant USD, 2023)$541,908,917

Commitment Year•2012Country of Activity•VenezuelaDirect Recipient Country of Incorporation•VenezuelaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date: Feb 27, 2012

First repayment (originally scheduled): Aug 27, 2014

Last repayment (originally scheduled): Feb 25, 2018

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Policy Banks

China Development Bank (CDB)

Receiving agencies

State-owned companies

Pétroleos de Venezuela S.A. (PDVSA)

Collateral providers

State-owned companies

Pétroleos de Venezuela S.A. (PDVSA)

Loan description

CDB provides $500 million loan to PDVSA for purchasing oil drilling equipment

Grace period•2.5 yearsGrant element•15.0343%Interest rate (t₀)•5.3021%Interest type•Variable Interest RateLoan tenor•6-month rateMaturity•6 years

Collateral

The borrowing was collateralized with PDVSA income from daily oil sales to China National United Oil Corporation (ChinaOil), which was deposited in a collection (escrow) account at China Development Bank (CDB). Banco de Desarrollo Económico y Social de Venezuela (BANDES) opened and maintained a USD-denominated collection (escrow) account with CDB into which all proceeds from oil export sales -- under an offtake agreement (petroleum sales and purchase contract) between PDVSA and ChinaOil -- were deposited for the purposes of (a) making regular debt service payments to CDB, and (b) maintaining a minimum cash collateral balance. The borrower was required to maintain a minimum cash balance in the collection (escrow) account equivalent to no less than 1.3 times the aggregate amount of principal, interest, and any other amount due during the next repayment period. If the minimum cash balance was not maintained, then PDVSA would be responsible for increasing the amount of fuel and/or crude oil to be delivered under the petroleum sales and purchase contract to ensure that (a) the actual debt service coverage ratio was maintained at the required level at the required times; and (b) the amount in the New Collection Account was sufficient to meet the required balance requirements set out in the facility agreement. If PDVSA did not do so, then BANDES was responsible for transferring funds to the CDB-controlled bank account to 'remedy any shortfall.' The lender also had the ability to block the debtor from withdrawing the funds.

Narrative

Full Description

Project narrative

On February 27, 2012, PDVSA entered into a $500 million loan agreement with China Development Bank (CDB) for the purchase of petroleum related goods and services from the People’s Republic of China. This loan carried the following borrowing terms: an interest rate of 6-month LIBOR (0.141% in February 2012) plus a 4.55% margin, quarterly amortization payments, a maturity length of 6 years (72 months) and a 30-month grace period (during which time no interest accrues or interest payments become due). Payments under this facility could be made with the proceeds from the sale of crude oil and related products at market prices. As of December 31, 2016, this loan had achieved a 99% disbursement rate (with $495 million being drawn by PDVSA). The loan’s amount outstanding was $463 million as of December 31, 2014, $318 million as of December 31, 2015, and $177 million as of December 31, 2016.

Staff comments

1. In order to accelerate oil production in Venezuela, China Development Bank agreed to provide $4 billion in loans to PDVSA (as captured via Record ID#38053) in 2011. This new loan would have a maturity date of 8 years at a rate of LIBOR + 5 percent. Additionally, two smaller credit lines of $1.5 billion (captured via Record ID#38055) and $500 million were provided for refinery operations and the purchase of oilfield equipment, respectively.