Ghana COCOBOD to finalise $800 mln cocoa loan this month

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Loan used to purchase cocoa from farmers has faced delays

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COCOBOD will pay nearly 8% interest on loan

By Maxwell Akalaare Adombila

ACCRA, Nov 21 (Reuters) - Ghana's cocoa marketing board COCOBOD plans to finalise a $800 million syndicated loan with banks by the end of the month and will pay interest of nearly 8% in a reflection of tightening credit conditions, a board executive said on Tuesday.

Ghana, the world's second largest cocoa producer behind Ivory Coast, uses an annual syndicated loan to finance bean purchases from farmers. Usually agreed at the start of the season in September, this year's loan has faced delays.

"We want to draw down as quickly as it is approved," COCOBOD Deputy Chief Executive Officer Ray Ankrah told Reuters.

Ghana's parliament gave a green light to the transaction last week, allowing the board to finalise paperwork with participating banks.

Those banks are expected to include Netherlands-based Rabobank, the Industrial and Commercial Bank of China, French banks Societe Generale and Natixis, and Britain's Standard Chartered, according to a memorandum COCOBOD submitted to parliament earlier this month.

Under the loan's terms presented to lawmakers by the parliamentary finance committee, COCOBOD will pay the one-month Secured Overnight Financing Rate (SOFR) - currently around 5.3% according to the New York Fed website - plus a margin of 2.65%.

Ankrah underscored that the interest rate of nearly 8% was not a reflection on COCOBOD's creditworthiness.

Nor, he said, was it related to the overall financial situation of Ghana, which is in talks with bilateral and commercial creditors to restructure its debts amid the worst economic crisis in a generation.

"The rate is high because of the SOFR, and that is a reflection of the tightening of funding sources on the global money market," Ankrah said. "This is a self-liquidating facility which is collateralised, and the risk to it is zero."

In total, COCOBOD plans to borrow $1.2 billion for this season, of which $800 million will come from the syndicate of lenders with the remaining $400 million to be raised from other sources, the board previously stated.

The syndicated loan will cover the purchase of 47% of the season's projected output of 850,000 tonnes, according to the finance committee report.

The loan is among the lowest in a decade. Ankrah said COCOBOD planned to capitalise on record-high global cocoa prices by selling part of the crop on the spot market.

Ghana in September raised the guaranteed cocoa price it pays farmers by more than 63% to 20,943 Ghana cedis ($1,837) per tonne in a bid to boost their incomes and prevent beans being smuggled to neighbouring countries. (Editing by Joe Bavier and David Evans)