Narrative
Full Description
Project narrative
In 2010, 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 syndicated pre-export term facility (loan) agreement with China Development Bank Corporation (CDBC) and Standard Chartered Bank to support the company’s expansion efforts. The loan carried the following estimated borrowing terms: a 7-year maturity, a 0.4116-year grace period, and a 3.9454%. The loan was secured by (i.e. collateralized against) Sonangol’s receivables from exports of oil to China. The (principal) amount outstanding under this loan was AOA 27,521,461,753,000 ($202,381,546) as of December 31, 2015, AOA 9,924,285,714,000 ($72,979,280) as of December 31, 2016, and AOA 0 ($0) as of December 31, 2017.
Staff comments
1. The Chinese project title is 安哥拉石油金融有限公司银团贷款项目. 2. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Angola was 0.4116 years in 2010. AidData estimates the grace period of the China Development Bank loan that supported the Sonangol Finance Limited by using this figure. See https://www.dropbox.com/scl/fi/qi2hvg1s05nsak3n1n83u/Private-Chinese-Loans-to-Angola-November-2023-Data-Extraction.xlsx?rlkey=0aq7jdxm29ynbw4yh1bn07c7m&dl=0. 3. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Angola was 3.9454% in 2010. AidData estimates the interest rate of the China Development Bank loan that supported the Sonangol Finance Limited by using this figure. See https://www.dropbox.com/scl/fi/qi2hvg1s05nsak3n1n83u/Private-Chinese-Loans-to-Angola-November-2023-Data-Extraction.xlsx?rlkey=0aq7jdxm29ynbw4yh1bn07c7m&dl=0. 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. 5. The sizes of the individual contributions of China Development Bank Corporation and Standard Chartered Bank to the lending syndicate are unknown. For the time being, AidData assumes equal contributions across the two known members of the syndicate ($500,000,000). 6. The borrowings of Sonangol’s wholly-owned subsidiary, Sonangol Finance Limited (SFL), are reportedly contracted under guarantee of Sonangol, supported by oil receivables sale and purchase agreements between Sonangol and SFL. 7. The amount outstanding figures are based on an exchange rate of 1 USD: 135,988 AOA. 8. This loan is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020.