Bank of China contributes to $1.3 billion syndicated receivables-backed trade finance facility to COCOBOD for its 2020/2021 crop season financing needs (Linked to Project ID#92295)

On September 29, 2020, a consortium of 24 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 2020/2021 crop season. Participants in the loan syndicate included Bank of China Limited (Project ID#92596), London Branch, Coöperatieve Rabobank U.A, DZ BANK AG Deutsche Zentral-Genossenschaftsbank Frankfurt am Main, Ghana International Bank plc, Industrial and Commercial Bank of China Limited, London Branch (Project ID#92295), MUFG Bank, Ltd., Natixis, Societe Generale, Standard Chartered Bank, Intesa SanPaolo S.p.A, Ecobank, Citibank, Deutsche Bank, OPEC Fund for International Development, State Bank of India, Sumitomo Mitsui Banking Corporation, Commerzbank, United Bank for Africa, Stanbic Bank Ghana, Absa Group Limited, Banque Cantonale de Genève, London Forfaiting Company Ltd, Sumitomo Mitsui Trust Bank, and AfrAsia Bank. The borrowing terms included a 7-month repayment period, an interest rate of 1-month LIBOR plus 175 basis points, a commitment fee of 0.62%, and an upfront fee of 1.25%. 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 calculated the all-in interest rate, 1.902%, by adding 1.75% to the average 1-month LIBOR rate in September 2020 (0.152%). 2. The individual contributions of the banks that participated in the lending syndicate are unknown. For the time being, AidData assumes equal contributions ($54,166,666) across all 24 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. 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 1.25% flat (upfront) fee is functionally equivalent to a management fee.

Number of official sources

2

Number of total sources

6