ICBC contributes to $1.3 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2017/2018 crop season financing needs (linked to ID#92556)

On September 20, 2017, a consortium of 27 financial institutions — including the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) — 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 2017/2018 crop season. The 27 participants in the loan syndicate included Ghana International Bank, Rabobank, Crédit Agricole, Natixis, Standard Bank, Sumitomo Mitsui, Bank of China, Tokyo-Mitsubishi UFJ Bank, Commerzbank, the Industrial and Commercial Bank of China, Rand Merchant Bank, Société Générale, ABN AMRO, Standard Chartered Bank, Barclays Bank, Afrasian Bank, Attijariwafa Bank, Ecobank, the Federated Project, Trade Finance Core Fund, and Tender Fund. The borrowing terms included a 11-month repayment period, an interest rate of 1-month LIBOR plus 65 basis points, a commitment fee of 0.2275%, and an upfront fee of 0.7%. 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. The first tranche of the loan was disbursed during the first week of October 2017.

Additional details

1. AidData has estimated the all-in interest rate by adding 1.113% to the average 1-month LIBOR rate in September 2017 (0.065%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($48,148,148) across all 27 members of the syndicate, which implies that the total financial commitment from Chinese state-owned banks was $96,296,296 (BOC's contribution is captured via Project ID#92556 and ICBC's contribution is captured via Project ID#92557). 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. 4. In August 2017, COCOBOD told the country’s parliament it was in financial distress due to obligations that included servicing China Eximbank loans for the Bui Dam Construction Project (captured via Project ID#183, ID#30801, ID#30709, and ID#30086). 5. AidData has assumed that the 0.7% flat (upfront) fee is functionally equivalent to a management fee. 6. The security margin is the assignment of cocoa contracts for 110% of the facility amount.

Number of official sources

2

Number of total sources

6