Skip to content
AidData logo

Overview

China Development Bank provides $2.5 billion loan to Sonangol to support its development efforts

Commitments (Constant USD, 2023)$2,584,928,228
Commitment Year•2013Country of Activity•AngolaDirect Recipient Country of Incorporation•AngolaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2013
First repayment (originally scheduled)
Apr 18, 2013
Last repayment (originally scheduled)
Dec 31, 2019

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

  • Sonangol E.P.

Implementing agencies

State-owned companies

  • Sonangol E.P.

Collateral providers

State-owned companies

  • Sonangol E.P.

Loan description

China Development Bank provides $2.5 billion loan to Sonangol to support its development efforts

Grace period•0.295 yearsGrant element•17.1746%Interest rate (t₀)•3.7689%Interest type•UnknownMaturity•7 years

Collateral

The pre-export finance (PXF) facility is collateralized against oil export revenues. 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

In 2013, China Development Bank (CDB) and Sonangol Finance Limited — a wholly owned subsidiary of Sociedade Nacional de Combustiveis de Angola (Sonangol), Angola's state-owned oil company — signed a $2.5 billion pre-export term facility (loan) agreement to support the company’s ‘development.’ The loan's estimated borrowing terms included a maturity of 7 years (84 months), a grace period of 0.295 years, and an interest rate of 3.7689%. The loan was reportedly collateralized with oil export revenues.

Staff comments

1. 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 0.295 years in 2013. 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 2. 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 as 3.7689% in 2013. 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 3. The loan's maturity is identified in a 2014 financial report from Sonangol. See https://s3.amazonaws.com/rgi-documents/914df033bd5c850ceab55c1c4f8d5db1e17bd77c.pdf 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.