China Eximbank provides $127.5 million buyer's credit loan for Irufen Island Resort Project

On December 14, 2017, the Export-Import Bank of China signed a $127.5 million buyer's credit loan agreement with Ahmed Siyam Holdings Pvt Ltd for the Irufen Island Resort Project (or Iru Fen Island Resort Project). The borrowing terms of the loan are unknown. The Government of Maldives issued a sovereign guarantee in support of the loan. The proceeds of the loan were to be used by the borrower to partially finance a $150 million 'EPC plus financing' (EPCF or EPC+F) turnkey contract between Maldives Sun Group (an alternative name for Ahmed Siyam Holdings Pvt Ltd) and China Communications Construction Company Limited, which was signed on January 30, 2016. The scope of the turnkey contract included the design and construction of the Irufen Island Resort. By the end of September 2018, the loan had achieved a disbursement rate of 32.9% (with $42,061,601 of $127.5 million being disbursed). China Eximbank made loan disbursements to Ahmed Siyam Holdings Pvt Ltd worth $20,715,590 during calendar year 2020. The loan’s amount outstanding was $106,784,411 as of December 31, 2019, $121,125,000 as of December 31, 2020, and $125,055,695 as of December 31, 2021. Ahmed Siyam Holdings Pvt Ltd made loan repayments to China Eximbank worth $6,375,000 during calendar year 2020 and no loan repayments to China Eximbank during calendar year 2021. The purpose of the project was to design and construct the Irufen Island Resort (also known as Sun Siyam Iru Fen Maldives) on the Noonu Atoll, which covers an area of 54 hectares. The resort was originally planned to feature beach villas, showstopper suites, private pools, restaurants, bars, a world-class spa, wellness and sports facilities, a kids’ village. Its location is close to some of the best dive spots in the region. Upon completion, the resort was expected to become the largest in the Maldives with 509 rooms. The Financial Times called it 'the biggest resort development deal in Maldivian history.' The resort owner of Ahmed Siyam Holdings Pvt Ltd -- also known as the Maldives Sun Group or Sun Siyam -- is Ahmed Siyam Mohamed, who was the leader of a political party in the ruling coalition of the then-President Abdulla Yameen, and one of the biggest tycoons in the country’s lucrative tourism sector. CCCC Highway Consultants Co., Ltd. (中交公路规划设计院有限公司) was responsible for project design and China Communications Construction Co., Ltd. (CCCC) was responsible for project implementation. Construction commenced in December 2019. After implementation delays due to COVID-19, the resort opened its doors to guests on October 28, 2021. The project was originally expected to reach completion in June 2020. It reportedly employed 64 Chinese workers and 1,193 foreign workers. The China Eximbank loan that was issued in support of this project has been a subject of local controversy. Due to the fact that the Government of the Maldives issued a sovereign guarantee in support of the loan, the private debt contracted by Ahmed Siyam Holdings Pvt Ltd threatened to become a public debt in the event that the Irufen Island Resort Project was insufficiently profitable of the borrower defaulted on its repayment obligations. Due to economic difficulties resulting from the COVID-19 pandemic, this risk became more obvious in 2020. Ahmed Siyam Holdings Pvt Ltd failed to meet a $10 million loan repayment obligation that was due to China Eximbank on July 21, 2020. The next day, China Eximbank warned the Government of the Maldives that, as the ultimate guarantor of the private debt, it was responsible for the loan repayment obligations of Ahmed Siyam Holdings Pvt Ltd., and failing to meet these obligations would result in a sovereign default, thereby jeopardizing the country’s international credit ratings and its macroeconomic stability. This issue was ultimately resolved when the Maldivian government threatened to exercise its mortgage rights if Ahmed Siyam Holdings Pvt Ltd did not deposit the overdue payment in an escrow account within five business days. Then, in 2021, the borrower made no loan repayments to China Eximbank (despite the fact that the loan's grace period had expired).

Additional details

1. This project is sometimes called the Sun Siyam Iru Fen Maldives Resort Project. 2. The Chinese project title is 马尔代夫IRUFEN度假酒店项目. 3. Given that the loan was denominated in USD, provided to a foreign recipient (borrower), and used to partially fund a commercial contract with a Chinese company, AidData assumes that it was issued as export buyer's credit. 4. Given that the loan was issued on December 14, 2017 and the first known loan repayment took place in 2020, the loan's implied grace period is approximately 2 years. For the time being, AidData relies on the grace period (2.22 years) that is identified in the World Bank's Debtor Reporting System (DRS) as the average grace on Chinese loans to the Maldivian state-owned entities in 2017. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 5. For the time being, AidData relies on the interest rate (4.7492%) that is identified in the World Bank's Debtor Reporting System (DRS) as the average interest rate on Chinese loans to the Maldivian state-owned entities in 2017. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 6. For the time being, AidData relies on the maturity (12.832 years) that is identified in the World Bank's Debtor Reporting System (DRS) as the average maturity length of Chinese loans to the Maldivian state-owned entities in 2017. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 7. 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

16

Number of total sources

32