Shanghai Pudong Development Bank offers a $84.9 million USD supplier's credit loan to Bangladesh Railways for the purchase of 200 Passenger Carriages

In 2018, CRRC Sifang Company Ltd., a subsidiary of China South Locomotive and Rolling Stock Industry (Group), attempted to arrange financing from Shanghai Pudong Development Bank - specifically, a $84.9 million USD supplier's credit loan - in order to finance the supply of 200 passenger carriages for Bangladesh Railways. CRRC Sifang. had submitted a credit proposal detailing the loan's terms and conditions to the Economic Relations Division (ERD) of Bangladesh's Ministry of Finance as well as Bangladesh Railways. The loan's interest was said to be 6-month USD LIBOR + a margin of 3.50%, plus another 1% of interest on the total amount of the insurance facility covered by China Export and Credit Insurance Corporation (Sinosure) as an arrangement fee and another 1% commitment fee to be charged on the un-drawn portion of the insurance facility. The loan's repayment period was to be 24 equal and consecutive semi-annual installments (12 years), with a grace period of six years for a total maturity period of 18 years. Officials in Government of Bangladesh were concerned about these interest rates due to the presence of LIBOR, calling them "very high" and saying that "the interest rate of commercial loan can't be over 3.5% to 4%, maximum 5%." The government remained in talks with the Chinese over the specifics of the loan as of April 2018. In October 2019, Crédit Agricole Corporate and Investment Bank provided a $84.97 million USD loan, with a grace period of 3 years, a repayment period of 15 years, and an interest rate of EURIBOR + 2% to finance the procurement of 200 passenger coaches from CRRC Sifang. EURIBOR at the time was in the negative, making this loan cheaper for Bangladesh. Based on this information, it appears that Bangladesh Railways did not accept the offered loan from Shanghai Pudong Development Bank.

Additional details

The European Investment Bank was also said to have provided a Tk 13.95 billion loan to Bangladesh Railways to procure 200 passenger cars in 2019 (see "Railway to procure 200 broad-gauge coaches"). The average 6-Month LIBOR rate in April 2018, when the loan terms was offered, was 2.494%. Therefore, AidData has coded the interest rate as 2.494% + 3.50%, or 5.994%. While this loan was understood by the parties as non-concessional, it fits the concessionality requires laid out by AidData's grant element and has coded accordingly.

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