Despite the escalating debt woes of Ghana, Ghana Cocoa Board (COCOBOD) is still expected to attract international banks to its annual one-year pre-export finance (PXF) or otherwise the Cocoa Syndicated Loan.

According to international research firm, Redd Intelligence, it is almost impossible for COCOBOD to default.

Defaulting on Cocobod’s “flagship financing” is “almost impossible,” commented Tedd George, founder of Africa-focused advisory firm, Kleos Advisory.

“It’s a low-risk African agricultural asset that you want on your books,” said George, adding, it is the only deal in Ghana that some banks will do.

The company has consistently raised a PXF syndicated facility on an annual basis ever since 1992, never defaulting and sometimes even paying early.

Mr. George explained that “the government will do everything in its power to get the facility repaid”.

“It might even repay [COCOBOD] before it repays the IMF, and the IMF might even support this.”

All eyes on pricing of deal

Redd Intelligence, which is based in Singapore, pointed out that all eyes will be on the pricing of this year’s deal, which already tends to generate “pretty poor returns on US dollars”.

Last year’s PXF, which raised $1.5 billion, paid a margin of 1.1 percentage points over Libor, considerably tighter than the 2020 deal which landed at +175 basis points

This year’s transaction, Redd Intelligence, said will instead be pegged against the Secured Overnight Financing Rate (SOFR) rate and will “definitely” pay a higher rate than last year's deal, given the current climate.

The deal is still in general syndication and will most likely be signed by the end of this month.

Ghana International Bank, ICBC, Mitsubishi UFJ Financial Group (MUFG), Natixis, Rabobank and Standard Chartered are coordinating the one-year facility.