Ghana’s cocoa marketing board, COCOBOD, has reportedly agreed to an annual loan for cocoa purchases with international banks, securing the funds at a record-high interest rate of 8%, as indicated by Bloomberg reports.
This development follows Ghana’s debt restructuring earlier this year, which had a detrimental impact on investor appeal.
The deal, considered the most expensive since the initiation of the arrangement in 1992-93, involves eight participating banks, with Coöperatieve Rabobank UA serving as the lead arranger alongside Standard Chartered Plc and Societe Generale SA, according to sources.
Unlike the usual signing period in September, the loan agreement is signed in November, marking a departure from the customary timeline set at the conclusion of COCOBOD’s roadshow in July.
The Deputy Chief Executive Officer of COCOBOD, Ray Ankrah, expressed the board’s intent to draw down the funds swiftly upon approval.
Ghana’s parliament granted approval for the transaction last week, allowing COCOBOD to finalize paperwork in collaboration with the participating banks.
As outlined in the loan terms presented to lawmakers by the parliamentary finance committee, COCOBOD will be required to pay the Secured Overnight Financing Rate (SOFR) for one month.
The current SOFR, approximately 5.3% according to the New York Fed website, will be augmented by a margin of 2.65%.
Ray Ankrah clarified that the elevated interest rate does not reflect COCOBOD’s creditworthiness but is a consequence of tightening funding sources globally.
He stated, “The rate is high because of the SOFR, and that is a reflection of the tightening of funding sources on the global money market.
This is a self-liquidating facility which is collateralised, and the risk to it is zero.”
COCOBOD aims to secure a total loan amount of $1.2 billion for the current cocoa season, with $800 million from the syndicate of lenders and an additional $400 million to be sourced from alternative avenues such as Olam Group Ltd. and Barry Callebaut AG.