Bank of China provides $19.9 million loan for 2500 Housing Units Project

On July 17, 2018, Bank of China (London Branch) and the Housing Development Corporation (HDC) signed a $19,985,550 loan agreement for Phase II of the 2500 Housing Units in Hulhumale’ Project. The loan carries the following borrowing terms: a 5-year maturity, a 2-year grace period, and an interest rate of LIBOR plus a 3.3% margin. The Government of the Maldives issued a sovereign guarantee for the loan. The borrower was expected to use the proceeds of the loan to finance 15% of the cost of a commercial contract between HDC and Sinohydro Group Limited, which was signed on May 28, 2017. The loan was fully disbursed as of March 15, 2019. Its amount outstanding was $19,985,550 as of December 31, 2019, $19,985,550 as of December 31, 2020, and $13,350,347 as of December 31, 2021. The borrower made repayments to Bank of China worth $6,635,203 during calendar year 2021. The project involves the construction of 2500 housing units in Hulhumale’. The housing units consist of both two-bedroom units and three-bedroom units, and are being built in 11 15-story and 16-story towers. This project is part of a larger program by HDC to establish 15,000 social housing units in Hulhumale’. Sinohydro Group Limited is the contractor responsible for project implementation. On March 10, 2020, government officials and Sinohydro Group Limited laid the foundation for the housing project and began construction. The project involves the construction of 2500 housing units in Hulhumale’. The project site is based in Hulhumale’ in the newly reclaimed Phase II. The project area is located on the central eastern area of Phase II. Locational coordinates are at around 4°13'46.38"N, 73°32'48.92"E (4.22956069961657, 73.54691415337328). The project is part of larger program by HDC to establish 15,000 social housing units in Hulhumale’. Sinohydro Group Limited is the contractor responsible for project implementation. On March 10, 2020, government officials and Sinohydro Group Limited laid the foundation for the housing project and began construction. However, the project has encountered implementation delays. The originally scheduled project completion date was June 2022. There also some indications that the Bank of China loan or the 2500 Housing Units Project has underperformed financially and that the borrower (HDC) has had difficulty meeting its repayment obligations to the lender. On July 18, 2019, HDC entered into a short-term loan agreement with the Maldives Ministry of Finance and Treasury amounting to MVR 37,464,962.45 on July 18, 2019 for the purpose of refinancing the interest payment obligations falling due in the month of July 2019 under the Bank of China loan agreement for the purpose of financing 15% of the total cost of Phase II of the 2500 Housing Units in Hulhumale’ Project. The disbursement of the loan was made on July 18, 2019. The loan was obtained for a duration of 12 months, and it was repayable in monthly installments from the date of disbursement; interest was charged and payable on a monthly basis at a rate of 10% per annum.

Additional details

1. The loan repayments were scheduled to commence upon the date falling on the first day after the expiration of the grace period, and principal (and interest on) the loan will thereafter be payable over a period of 3 years in 6 bi-annual, equal, consecutive installments coinciding with each interest period (of 6 months). AidData has estimated the all-in interest rate by adding 3.3% to the average 6-month LIBOR rate in July 2018 (2.489%). 2. This loan may be related to Project ID#54282 and ID#53832. This issue warrants further investigation. 3. This project is also known as the Hiyaa Housing Project. The Chinese project title is 2500套住房开发项目 or 马尔代夫胡鲁马累1700套房建项目. 4. The loan repayments were scheduled to commence upon the date falling on the first day after the expiration of the grace period, and the principal of (and interest on) the loan was to thereafter be payable for a period of 3 years in 6 bi-annual, equal, consecutive installments coinciding with each interest period (of 6 months). 5. Some sources refer to this project as involving the construction of 1,700 housing units — 1,020 three-room apartments of 900 square feet and 680 two-room apartments of 650 square feet — rather than 2,500 housing units. This issue warrants further investigation. 6. The amounts outstanding and repayments data are drawn from https://www.dropbox.com/s/q82x5hte85kc20e/105._Statement_of_Government_Guarantees_Audit_Report_2021.pdf?dl=0 and https://www.dropbox.com/s/rik8ynrjweat5aw/StatementOfGovernmentGuaranteesFinancialYear2020%20%281%29.pdf?dl=0

Number of official sources

10

Number of total sources

19