CDB provides $80 million loan (Tranche B) to Banco de Desarrollo del Ecuador B.P. for on-lending purposes (Linked to Record ID#58862 and #62782)

Project narrative

On October 20, 2017, the Banco de Desarrollo del Ecuador B.P. (BDE or Ecuadorian Development Bank) entered into a $200 million term (loan) facility agreement with China Development Bank (captured via Record ID#58862). The loan consisted of two tranches: a $120 million loan tranche (known as ‘Tranche A’) and an $80 million loan tranche (known as ‘Tranche B’). Tranche A, which is captured via Record ID#62782, carried an interest rate of 6.5%, a default (penalty) interest rate of 2%, a maturity of 8 years, a grace period of 2 years, a commitment fee of 1%, and an upfront (management) fee of 1% ($1.2 million). Tranche B, which is captured via Record ID#91971, carried an interest rate of 6.5%, a maturity of 8 years, a grace period of 3 years, a commitment fee of 1%, and an upfront (management) fee of 1% ($800,000). The borrower was responsible for repaying Tranche A in 12 equal, semi-annual repayments. The borrower was responsible for repaying Tranche B in 10 equal, semi-annual repayments. Both tranches were backed by a sovereign guarantee from Ecuador’s Ministry of Finance. The first tranche of $120 million (‘Tranche A’) was earmarked for on-lending by DBE to eligible Ecuadorian state-owned enterprises and government agencies for purposes of financing projects in Ecuador (that were approved by China Development Bank). DBE was expected to on-lend the proceeds of Tranche A to borrowers at a 7.11% to 9.25% interest rate, based on borrower's credit risk rating, as well as the credit repayment term. As of early 2019, $64 million of Tranche A had been disbursed. The deadline for the execution of Tranche A was until April 20, 2020, and it was fully disbursed by February 2020. 234 subsidiary loans were ultimately issued through Tranche A. The second tranche of $80 million (of ‘Tranche B’) was earmarked for on-lending by DBE to eligible Ecuadorian state-owned enterprises and government agencies for purposes of financing payments to be made to suppliers in connection with telecommunications, road construction, transportation and equipment, sewage, potable water, and sanitation projects. As of early 2019, none of these funds had been disbursed and the deadline for the execution of Tranche B was until March 31, 2021. However, by the end of 2020, 14 subsidiary loans worth $1.63 million had disbursed through Tranche B (a 2.29% execution rate). Subsidiary loans worth $71.08 million had been approved (officially committed) through Tranche B by the end of 2020. The loan’s (principal) amount outstanding (across Tranches A and B) was $142,667,509.93 as of December 31, 2021 and $107,009,632.45 as of November 30, 2022.