COCOBOD's domestic finance program is a head-scratcher

A. The story in brief

1. For decades, Cocobod used to play in the leagues of the big international banks. In 2021, it raised US$1.5 billion from a syndicate including 24 international financial institutions at LIBOR plus 1.10% (i.e. a low interest rate that would have made a Ghanaian finance minister salivate).

2. By 2024, it needed a US$70 million government bridge to avert default on a syndicated-loan repayment. Now it is inviting Ghanaian pension funds to lend it $1.4 billion in a commercial paper and bond transaction on the Ghana Stock Exchange.

3. It has set up a shell company “special purpose vehicle” (SPV), placed the head of Ghana’s Association of Banks at the helm, and called it “Cocoa Capital” to receive the money.

4. Beacon, a local credit rating agency launched in 2024, rated Cocoa Capital A (above its sole owner and financial backstop, COCOBOD, which it rated BBB).

It did so on 1 September, 24 days before Deloitte signed an audit showing that, as of 8 September, the new issuer had no cash and its GH¢5 million share capital was still unpaid.

COCOBOD’s full audited accounts haven’t even been signed off in two financial years. So, what analysis did Beacon do to justify the uplift? It won’t tell. The prospectus only encloses the “rating letter” which merely declares from the throne of opinion how safe Cocoa Capital is. More on this later.

See why some of us are tepid about the much celebrated “Africa Credit Ratings Agency”?

5. As of 26 September, Cocoa Capital’s website still marked the prospectus “awaiting publication”, although the advertised bookbuild (to collect the money) opens on the 28th and closes on the 30th (or 29th, the prospectus and issuance announcement are confusingly contradictory).

There is no international banking syndicate to ask hard questions.

Workers’ pension savings are on the line. The Trades Union Congress (TUC) in Ghana seems reticent about the matter, and Trustees are basically unaccountable to workers for the most part. Who needs grilling on international roadshows when the soft life is so good at home?

6. It is understandable that Ghana now wants to finance its cocoa with its own currency at home (GoldBod has boosted government’s confidence in that regard).

But the documents out there contradict themselves on several points, are opaque about the sponsor's finances, and overstate the collateral.

B. What exactly is the offer? 7. The prospectus gives at least three incompatible descriptions of the Notes. After carefully reading it, the press announcement, and a GCB flyer, I was totally confused about what is on offer. Word on the street is that respectable advisory firm, SEM Capital is the Lead Arranger, but no lead arranger information is provided anywhere (despite 6 named bookrunners) making it unclear as to who was responsible for putting all the pieces together as well as where the GH¢81.5 million arranger fees are going.

8. The offer consists of "direct, general, unconditional, unsecured" obligations. On pages 65 and 70, they are “limited recourse” with “no security granted over any asset.” Yet, on page 154, we read in the Directors’ note (reviewed by PwC) that all the instruments are “assumed to be secured by the Assigned Cocoa Contracts/Receivables”.

The lawyers (highly respected Ghanaian law firm, Sory) say on pages 131 and 135 that Cocobod undertakes to fund any debt-service shortfall, enforceable by the “the Issuer and/or the Bond Trustee”. So, what is the true situation?

C. The sponsor's finances are opaque 9. The prospectus has no COCOBOD balance sheet, debt schedule or cash-flow statement.

PwC reviewed just the revenue, and only under a limited-assurance standard (see page 140 of the prospectus).

Whoever put the documents together however insists in the prospectus that PwC concluded on COCOBOD's "financial position" and "financial performance". No one can do that on just a revenue statement.

10. Meanwhile, COCOBOD's June 2026 management accounts, reported by trade press, show liabilities up 47.5% to $3.1bn, and equity down 57.9% to $0.23bn. How can a public offer of $1.4bn be opaque about such matters?

11. The Ghana Stock Exchange, where the money is being raised, has rules requiring three years of audited statements in the information memorandum, the latest no more than nine months old, and tangible net worth of at least GH¢5m ($0.43m) shown in audited accounts no more than 15 months old (See GSE CP Rules, Rules 10 - 11, Appendix 2 item 20).

Under certain circumstances a guarantee may be substitutable (not evident here.) Deloitte's audited statement of affairs (Cocoa Capital - the SPV - not Cocobod) shows zero cash and, further, indicates that Cocobod hasn’t even bothered to pay in the $430k equity as cash (still recorded as a “receivable”).

Cocoa Capital’s equity of GH¢4.9m is also below the legal GSE threshold. Yet, the prospectus says that the shares were "fully paid for in cash".

Did SEC bless all this with some kind of waiver, or what?

D. Shaky Collateral

12. The prospectus promises assigned receivables of at least 1.2x outstandings (page 28). The model applies a 2% buffer (page 155) and shows asset coverage of 1.00x1.05x for 2026 to 2028 (page 162).

13. Moreover, on the model's own inputs, 40% of what Cocobod gets in total (gross) from its cocoa sales is $1.2bn (GH¢13.98bn), below the GH¢14bn Commercial Paper principal before any interest.

The inputs used are 650,000 tonnes of cocoa production in Ghana, US$4,500 per tonne pricing on the international markets, and GH¢11.95 per dollar as the exchange rate.

14. Furthermore, COCOBOD itself earlier projected 450,000 - 550,000 tonnes for 2026/27 (forecast dated to 30 July.) At that range the assigned pool falls to GH¢9.7 - 11.8bn ($840m to ~$1bn). The prospectus concedes that actual output ran at 54% - 92% of projections over the past three seasons.

In short, under various stress-testing scenarios, the projections come under serious strain. At first glance, the picture appears to improve if Cocobod’s numbers are used, but then contradictions emerge.

15. The newly announced GH¢42,400 price scaled by a farmer share of 0.7118 implies realised FOB of about GH¢59,570 a tonne. That is roughly US$4,985 at the model's GH¢11.95 rate, about 11% above the prospectus's US$4,500.

The prospectus model and Cocobod’s Friday's price announcement cannot both be vindicated.

If the announcement turns out right: i) at 650,000 tonnes, 40% of FOB is about GH¢15.5bn, and so the cover becomes roughly 1.03x after 10% interest, still well short of the promised 1.2x; ii) at COCOBOD's own 450,000 - 550,000 tonnes, the pool is GH¢10.7 - 13.1bn, significantly short.

16. The new Cocobod Act fixes the farmer's share at no less than 70% of realised gross FOB (page 61). As hinted, the new cocoa farmgate price is already 78.8% of the model's FOB (Cocobod’s gross export proceeds), leaving COCOBOD about 21.2% for margins, haulage, extension, statutory funds and all financing costs.

Cabinet also reserved at least 50% of beans for local processing from 2026/27, which shrinks export receipts the model treats as whole. (Cocobod’s official projection of 71.18% farmer share of export proceeds is rosier and probably unrealistic.)

E. The "legacy debt" was already paid

17. The bond is marketed to refinance DDEP-era cocoa bonds (page 15), with GH¢2.3bn ($200m) "to be refinanced in 2026" (page 153). COCOBOD announced on 1 September that it had paid GH¢2,306,202,372.09 to those holders.

The prospectus is silent on the payment and its funding, and states that the issuer (Cocoa Capital) has no borrowings (page 85).

18. The Announcement lists, as a use of CP proceeds, repaying "a bridge facility secured to refinance existing COCOBOD legacy debt".

This is all very confusing.

If the legacy debt has already been paid by some kind of bridge loan, why isn’t it being made clear that this new commercial paper is going to pay that lender? And why keep the details of the lender secret? Is it because they are in this deal and some might view that as conflict?

F. Pension trusteeship: the soft target

19. Ghanaian pension assets stood at GH¢78.2bn in June 2024 ($6.7bn) and were heading for GH¢100bn ($8.6bn). The debt exchange restructured GH¢31bn ($2.67bn) of pension-held debt. Workers in Ghana had their fingers burnt badly.

Now, a prospectus seeking to grab their money again admits the mess of the 2023 cocoa-bill exchange and pension exchange on page 50 and yet goes on to claim on page 64 an "unblemished repayment record" on the international stage when the relevant precedent is the sad saga of the cocoa bills default (not to mention the Finance Ministry's revelation that it was saved from default by the government in July 2024.)

20. Meanwhile, NPRA, the pensions regulator in Ghana, has guidelines that cap exposure to any single corporate or agency issuer at 5% of scheme assets (summary; NPRA). Across a roughly GH¢100bn industry, that limits pension demand to about GH¢5bn against the GH¢16.3bn that is on offer.

It would be very interesting to see which other participants are being enlisted. Seeing SSNIT and state enterprises among subscribers would definitely raise some eyebrows.

G. Are the Gatekeepers holding the fort?

21. Beacon, the rating agency, presents the following interpretations for its grades.

22. The Commercial Paper (CP) supplement in the prospectus says the CP is "rated A1 with a stable outlook" (page 120). This is a bizarre misrepresentation, and Beacon should be protesting if it takes its published opinions seriously. It assigned ST1(SO) and no outlook for the commercial paper (page 126).

The commercial paper offering being a short-term instrument of less than a year wouldn’t be benefiting from a medium-to-long term outlook anyway.

23. Both supplements close applications to participate in the offering at 15:00 on Tuesday 29 September (pages 116 & 121); yet there are official Announcements and a GCB (formerly Ghana Commercial Bank) flyer saying that applications will close on Wednesday 30 September.

24. Condition 6.6.2 bars redemption "within 12 months of the relevant Issue Date" and so clearly conflicts on its face with the 270-day commercial paper (see page 102).

25. The prospectus already circulated to the industry is replete with placeholders. On page 7 (PDF version; page 6 in any printed version), there is an unsigned and undated responsibility statement; and on page 77, it is clear that as of today the independent chair of the only standing board committee (responsible for audit, risk, and compliance) has not even been appointed.

We even have three pages of the issuer’s audited appendix headed “Cocoa Ghana Plc” rather than “Cocoa Capital Plc” (see pages 176 to 178 in the PDF version of the prospectus).

26. It would look like gatekeeping is being rushed, and the traces of that are everywhere.

Conclusion 27. As a general policy matter, Cocobod’s domestic financing programme is mounted on a bit of quicksand.

The IMF’s August 2026 Ghana report (Article IV Consultation) records GH¢3.62 billion farmer arrears, GH¢3.7 billion legacy-debt restructuring and GH¢4.35 billion cocoa-road liabilities to be transferred. The government’s July letter to the IMF also pledges that COCOBOD will refrain from non-concessional and collateralised funding.

Now its wholly owned SPV is selling domestic paper, supported by assigned cocoa payments and a COCOBOD shortfall obligation (see pages 27 to 31 and 129 to 135) even as advisors vacillate on whether these constitute security.

The development should be receiving far closer scrutiny than would be allowed by this rushed fundraising, which seems to have been pre-cooked with banking insiders and pension fund managers. Yet, any mess from the programme would assume a quasi-fiscal character.

Ghana’s longsuffering formal sector workers, and as a last resort taxpayers, would be left to pick up the pieces as we saw during the DDEP. The only people guaranteed to benefit no matter what happens are the highly paid advisers and consultants.