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Ghana secures $800 million loan with international lenders at record interest rate of 8% 



Nana Akufo Addo1

Ghana’s cocoa marketing board, COCOBOD, has agreed to its yearly loan for cocoa purchases with international banks at a record-high interest rate of 8% according to reports from Bloomberg.

This increase comes in the wake of the West African nation’s debt restructuring this year, which adversely impacted investor appeal. 

The deal is said to be the most expensive the board has ever agreed since 1992-93 when the arrangement began.  

It is the first time the loan will be signed in November as it is usually signed around September at the conclusion of the COCOBOD’s road show in the month of July. It involves eight participating banks, with Coöperatieve Rabobank UA acting as the lead arranger, alongside Standard Chartered Plc and Societe Generale SA, according to sources. 

The COCOBOD’s Deputy Chief Executive Officer Ray Ankrah told Reuters saying, “We want to draw down as quickly as it is approved,” 

Last week, Ghana’s parliament granted approval for the transaction, enabling the board to proceed with finalizing paperwork in collaboration with the participating banks. 

Structure of the loan 

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, standing at approximately 5.3% according to the New York Fed website, will be augmented by a margin of 2.65%. 

The COCOBOD’s deputy CEO explained that the record interest does not reflect the creditworthiness of the agency but rather a result of tightening funding sources.  

In his words, “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 intends to secure a total loan amount of $1.2 billion for the current season. Of this sum, $800 million is earmarked to be obtained from the syndicate of lenders, while the remaining $400 million is set to be raised from alternative sources such as Olam Group Ltd. and Barry Callebaut AG to top up.