ICBC contributes to $1.3 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2019/2020 crop season financing needs (Linked to Project ID#92558)

On September 13, 2019, a consortium of 19 financial institutions — including the Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) — finalized a $1.3 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 2019/2020 crop season. Participants in the loan syndicate included Coöperatieve Rabobank U.A., Ghana International Bank Plc, MUFG Bank, Ltd., Natixis, Nedbank Limited, London Branch, Societe Generale, Bank of China Limited, DZ BANK AG, Industrial and Commercial Bank of China Limited, Intesa SanPaolo S.p.A, Standard Chartered Bank, Commerzbank, Crédit Agricole CIB, Ecobank, Standard Bank, Sumitomo Mitsui Banking Corporation, AfrAsia Bank, Barclays Bank of Ghana, and Federated Project and Trade Finance Core Fund. The borrowing terms included a 7-month repayment period, a 0.35% commitment fee, a 0.61% flat (upfront) fee, and an interest rate of LIBOR plus 55 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. According to the Chief Executive of COCOBOD, Hon. Joseph Boahen Aidoo, this loan was repaid two months ahead of schedule.

Additional details

1. AidData has estimated the all-in interest rate by adding .55% to the average 6-month LIBOR rate in September 2019 (2.049%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($68,421,052) across all 19 members of the syndicate, which implies that the total financial commitment from Chinese state-owned banks was $136,842,104 (BOC's contribution is captured via Project ID#92558 and ICBC's contribution via Project ID#92559). 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. The contractual terms outlined in a document to the Parliament of Ghana indicate that the security margin is the assignment of cocoa contracts for 110% of the facility amount. 6. The commitment fee is referred to in the source documentation as a ’35% on interest margin’. AidData has assumed that the 0.61% flat (upfront) fee is functionally equivalent to a management fee.

Number of official sources

3

Number of total sources

3