ICBC contributes to $1.5 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2010/2011 crop season financing needs

On September 23, 2010, a consortium of 36 financial institutions — including the Industrial and Commercial Bank of China (ICBC) — finalized a $1.5 billion receivables-backed trade finance facility (loan) agreement with Ghana Cocoa Board (COCOBOD), a state-owned enterprise and the world's second largest cocoa producer, for purchasing cocoa from farmers during the 2010/2011 crop season. The 36 participants in the loan syndicate included Credit Agricole CIB, Ghana International Bank, Industrial and Commercial Bank of China (ICBC), Standard Bank and SMBCE. The borrowing terms included a 1-year repayment period and an interest rate of LIBOR plus 90 basis points. The Government of Ghana issued a sovereign guarantee in support of the loan. The loan was also secured by (i.e. collateralized against) receivables from future cocoa sales contracts.

Additional details

1. AidData has estimated the all-in interest rate by adding 0.90% to the average 6-month LIBOR rate in September 2010 (0.519%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($41,666,666) across all 36 members of the syndicate. 3. Ghana’s cocoa production is regulated by the Ghana Cocoa Board (COCOBOD), an organization separate from the Ministry of Food and Agriculture that is wholly owned by the Government of Ghana. COCOBOD does not purchase any of the cocoa which is exported, but is responsible for assuring the quality of the product. To ensure the high quality of Ghana’s cocoa exports, the COCOBOD oversees horticulture practices and regulates the use of pesticides and fertilizer. In addition, COCOBOD sets the producer prices for cocoa farmers and, through a subsidiary, oversees the marketing of cocoa. The operations of the COCOBOD are funded through the receipt of a percentage of the revenue received from cocoa exports, but all profits after covering expenses are passed onto the Government of Ghana in the form of export taxes.

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