CDB provides $40 million loan to National Bank of Costa Rica to support infrastructure and social development projects (Linked to Project ID#35549)

On November 17, 2008, China Development Bank (CDB) and the National Bank of Costa Rica -- a state-owned bank in Costa Rica -- signed a $40 million facility agreement. The proceeds of the loan were to be used by the borrower to support infrastructure and social development projects in Costa Rica. The loan carried the following borrowing terms: a maturity of 5 years, a grace period of 0.5 years, an interest rate of 6 month LIBOR plus a 2.2% margin, a 2% default (penalty) interest rate, a commitment fee of 0.30%, and a one-time, upfront (management) fee of 0.60%. The borrower was responsible for making 9, equal semiannual repayments. Revenue from financial assets was collected in a collateral pledge account, out of which debt service was paid.

Additional details

1. The CDB facility (loan) agreement can be accessed in its entirety via https://www.dropbox.com/s/cemcy1xv0jstun9/2008%20CDB%20Loan%20Agreement%20with%20Costa%20Rica.pdf?dl=0. 2. Average 6-month LIBOR in November 2008 (2.658%) was used to calculate the all interest rate. The all-in interest rate was calculated as 4.858% (2.658% + 2.2%). 3. The CDB loan agreement specifies that '[a]t any time after the first repayment date, CDB shall have the right to request the borrower in writing, and the Borrower shall have the obligation […] to (i) enter into the Pledge Agreement with CDB and the Collateral Service Agent [which is Clearstream Banking in Luxemburg] and (ii) deposit into the Pledged Account Collateral [defined as any securities eligible for deposit in the Collateral Service Agent’s system] with an aggregate current value determined by [Clearstream Banking] to be no less than the amount of the Loans then outstanding.' Afterwards the borrower has to ensure that the pledged account always contains collateral with a value not less than the outstanding amount until the final maturity date. 4. This CDB loan is not captured in the China-Latin America Finance Database, which is co-produced by the Inter-American Dialogue and Boston University’s Global Development Policy Center.

Number of official sources

3

Number of total sources

6