Narrative
Full Description
Project narrative
On December 27, 2012, China Development Bank (CDB) and Sonangol Finance Limited — a wholly owned subsidiary of Sociedade Nacional de Combustiveis de Angola (Sonangol), Angola's state-owned oil company — signed a $1 billion pre-export term facility (loan) agreement to support the company’s ‘development.' The loan had a maturity of 10 years and an interest rate of LIBOR plus a 3.5% margin, but its other borrowing terms are unknown. On November 30, 2017, Sonangol Finance Limited fully repaid this loan when it made an $200,000,00 early loan repayment as part of a broader (2016) debt refinancing agreement with CDB. The loan was 'fully settled' on January 31, 2018.
Staff comments
1. The all-in interest rate that applies to this loan (4.015%) was estimated by taking the average 6-month LIBOR rate during the month (December 2012) when the loan agreement was finalized (0.515%) and adding a 3.5% margin. 2. Evidence of the loan's full and final repayment can be found on pg. 151 of https://www.dropbox.com/scl/fi/7jhwalmuyavwszvspq1x5/sonangol-annualreport-2017-eng.pdf?rlkey=w6n6njkitwzzczdg1k8coeshg&dl=0 3. 4. A pre-export finance (PXF) facility 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.