COCOBOD to sign $1.5b loan syndication agreement next month
COCOBOD is set to sign its annual cocoa loan syndication deal with some 20 French banks in September 2019. This was after it secured Parliament’s approval to borrow up to $1.5 billion to aid cocoa purchases for the 2019/2020 crop season.
Details of the deal
Joy Business understands that COCOBOD could sign the deal with 20 banks possibly on September 13 in Paris, France.
Parliament’s approval is to allow COCOBOD to borrow up to 1.5 billion dollars, but it is likely that COCOBOD may not take up the entire amount that it has been given the approval to raise from the market.
The annual loan deal is the largest pre-export soft commodity financing facility in sub-Saharan Africa. Many would also be looking to see whether the deal will be oversubscribed by the participating commercial banks.
Is the amount being raised enough?
Joy Business is learning that some $300 million have already been secured through a medium-term facility from some of the 20 commercial banks that would be supporting COCOBOD’s syndication facility. $650 million facility from the African Development Bank is expected to support COCOBOD’s operations. Sources say this would enable COCOBOD to meet its financial needs for the 2019/2020 crop season.
When would the funds hit COCOBOD’s accounts in Ghana?
The first tranche of the funds is likely to hit the Bank of Ghana accounts in the first week in October.
This has always been the case any time COCOBOD goes out to secure the loan to support its operations.
Impact on the Economy
One of the immediate impacts the deal will have on the economy is that it will improve Bank of Ghana’s reverses, a situation that could give investors and currency traders some assurance about the central bank’s ability to defend the local currency.
The payment to the farmers and licensed buying companies will also improve liquidity in the banking system.
The inflows of these funds will also help stabilise the cedi in the last quarter of this year.
How the 2017/2018 funds were utilized
According to documents submitted to Parliament, this is how the GH¢5.49 billion borrowed last year was utilised.
Seed fund to LBCs for cocoa purchases – ¢1.935, 325, 697.95
CTORs/Cocoa deliverables paid to LBCs – ¢2,813,860,155. 30
Inputs/CODAPEC and Hi Tech Expenses – ¢395,822,471.63
Operational Expenses – ¢382,796,675.12
Total – ¢5,497,805,000
The 2019/2020 syndicated loan would be drawn down in three tranches.
First would be 50 per cent of the $1.3 billion, which would translate to about $650 million with an additional $450 million to be made in November.
The remainder was disbursed later.