COCOBOD signs US$1.3bn loan syndication deal

COCOBOD was set to conclude this year’s version of its annual cocoa loan syndication deal in Paris, France with some 24 international banks at the end of last week

The signing was expected last week Friday.

This was after it secured Parliament’s approval to borrow up to US$1.5 billion to finance cocoa purchases for the 2019/2020 crop season.

Sources at COCOBOB say the Board has already secured from some of the banks the extra US$200 million – above the US$1.3 billion under the main syndication – for which it has obtained legislative approval.

The first tranche of the funds is likely to hit the Bank of Ghana’s accounts in the first week in October.

COCOBOD plans to use the funds to finance the purchases of the 950 000 tonnes of cocoa beans it expects will be produced during the impending crop season.

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 reserves, a situation that will give investors and currency traders some assurance about the central bank’s ability to defend the local currency. This is expected to enable the cedi, which has depreciated by over eight percent since the beginning of this year, to recover some of its lost ground and be relatively stable into the last quarter of this year

The payment to the farmers and licensed buying companies will also improve liquidity in the banking system, which could possibly exert downward pressure on interest rates, especially if the BoG cuts its key Monetary Policy Rate at the end of this week as is being hoped for by growth focused economists.

Five of the financial institutions expected to lead the deal are ROBO-Bank, SG Bank, MUFG, NEBBANK, NET-IXIS.

The 2019/2020 syndicated loan would be drawn down in three tranches. First would be 50 percent of the US$1.3 billion, which would translate to about US$650 million with an additional US$450 million to be received in November. The balance could comprise the third tranche which is usually used to finance purchases during the light crop season, which produce is used by local processing firms.