CDB defers principal and interest payments for 12 months on Tranche B of $2 billion oil-backed loan in August 2020 (Linked to Project ID#58839, #91347, #58842, ##96374, #96456, #96457)

On August 5, 2020, China Development Bank (CDB) and Ecuador's Ministry of Finance signed a debt rescheduling agreement. It deferred principal and interest payments for 12 months –- providing $416.8 million of cash flow relief –- on a $2 billion oil-backed loan (facility) that CDB issued to Ecuador's Ministry of Finance on April 29, 2016. The $2 billion loan consists of two tranches: a $1.5 billion tranche known as Tranche A (captured via Project ID#58839) and an RMB 3,255,000,000 (approximately $500 million) tranche known as Tranche B (captured via Project ID#58842). Under Tranches A and B, the Government of Ecuador was originally scheduled to pay $166.8 million through the end of 2020 (in two installments) and $250 million from January 2021 to July 2021 (in three installments). However, under the rescheduling agreement, the Government of Ecuador agreed to pay the $416.8 million in 11 quarterly installments (of $37.9 million each) from the last quarter of 2021 (on October 29, 2021) until the second quarter of 2024 (on April 29, 2023). In effect, the borrower was given one additional year of grace on Tranche A and Tranche B. According to Ecuador's Ministry of Economy and Finance, the interest rates on Tranche A and Tranche B remained unchanged under the August 5, 2020 rescheduling agreement. According to Ecuador's Ministry of Finance, the August 5, 2020 agreement also rescheduled oil deliveries from PetroEcuador to UNIPEC Asia Co. Ltd. and PetroChina International. These oil deliveries support the CDB loan in that the proceeds from the sale of oil serve as a source of debt service and collateral. The updated delivery schedule is unknown. However, it is known that the parties agreed to postpone the shipment and sale of 108 million barrels of oil to Chinese buyers, thereby giving Petroecuador the flexibility to sell its oil to other buyers. The August 5, 2020 reschedulings of Tranche A and Tranche B are captured via Project ID#91347 and Project ID#96374, respectively. Then, on September 19, 2022, CDB and the Government of Ecuador signed another agreement to reschedule $1.395 billion of outstanding debt under Tranches A and B of the $2 billion oil-backed loan that was issued on April 29, 2016 and under Tranches A and B of a $900 million oil-backed loan (with a $675 million tranche known as Tranche A and a RMB 1.53 billion tranche known as Tranche B) that was issued on December 20, 2018 (captured via Project ID#59014 and #59015). Under the terms of the September 19, 2022 rescheduling agreement, the parties agreed to 3-year maturity extensions and interest rate reductions for Tranches A and B of the $2 billion loan and Tranches A and B of the $900 million loan. The parties agreed to reduce the interest rate that applies to Tranche A of the $2 billion loan from 7.25% to 6.3%, reduce the interest rate that applies to Tranche B of the $2 billion loan from 6.8717% to 5.9%, reduce the interest rate that applies to Tranche A of the $900 million loan from 6.6% to 6.3%, and reduce the interest rate that applies to Tranche B of the $900 million loan from 6.2% to 5.9%. The parties also agreed to extend the final maturity dates of Tranches A and B under the $2 billion loan from April 29, 2024 to April 29, 2027, and extend the final maturity dates of Tranches A and B under the $900 million loan from December 12, 2024 to December 12, 2027. The September 19, 2022 reschedulings of Tranche A and Tranche B of the $2 billion loan are captured via Project ID#96456 and Project ID#96457, respectively. The September 19, 2022 reschedulings of Tranche A and Tranche B of the $900 million loan are captured via Project ID#96373 and Project ID#96375, respectively. The Government of Ecuador and China Eximbank also rescheduled multiple loans on September 19, 2022, and the rescheduling agreements with China Eximbank and CDB jointly produced cash flow savings worth $1.4 billion. The September 2022 deal reduced repayments to CDB by $745 million over a 3-year period (2022-2024) and reduced repayments to China Eximbank by $680 million over a 4-year period (2022-2025). Another feature of the deal is that it postponed the shipment and sale oil to CNPC, thereby giving Petroecuador the flexibility to sell more of its oil to other buyers at market prices.

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