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Overview

CDB provides $1.5 billion loan to PDVSA for working capital purposes

Commitments (Constant USD, 2023)$1,538,329,771
Commitment Year•2014Country 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
Dec 14, 2014
Start (actual)
Dec 1, 2014
End (actual)
Dec 1, 2017
Last repayment
Dec 13, 2017

Geospatial footprint

Map overview

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CDB provides $1.5 billion loan to PDVSA for working capital purposes. More detailed locational information can be found at: https://www.openstreetmap.org/way/235751196

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 desecription

CDB provides $1.5 billion loan to PDVSA for working capital purposes

Grant element•4.1991%Interest rate (t₀)•6.5909%Interest type•Variable Interest RateMaturity•3 years

Collateral

The pre-export finance (PXF) facility was collateralized against PDVSA income from oil sales to Zhenhua Oil. 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.

Narrative

Full Description

Project narrative

On December 17, 2014, China Development Bank (CDB) entered into a $1.5 billion pre-export finance (credit) facility with Petróleos de Venezuela, S.A. (PDVSA) for working capital purposes. The interest rate was set to LIBOR (0.343%) plus a 6.25% margin (6.593%). Interest payments were to be made quarterly and the term of the facility was 36 months (final maturity date: 2017). Payments under the facility could be made through the delivery of crude oil and related products -- at market prices -- to Zhenhua Oil (the oil exploration and production subsidiary of Chinese defense contractor Norinco). As of December 31, 2015, $150 million had been amortized and the loan’s (principal) amount outstanding was $1.2 billion. As of December 31, 2016, the loan’s (principal) amount outstanding was $600 million.

Staff comments

1. Reuters reports that PDVSA paid off a $1.5 billion loan that it received in 2014 in December 2017, but it does not identify the source of the loan. This source may or may not be referring to the CDB loan that was issued in December 2014. This issue merits further investigation. 2. AidData assumes that the credit facility was fully drawn down by the borrower (based on Reuters reporting). Therefore, Record ID#58504 is not assigned to the umbrella category. 3. A pre-export finance (PXF) facility is 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. 4. The China-Latin America Finance Database, which is co-produced by the Inter-American Dialogue and Boston University’s Global Development Policy Center, does not capture this $1.5 billion loan from China Development Bank.