Cocobod pitches $1.4 billion domestic financing plan

Ghana Cocoa Board (COCOBOD) is seeking to raise GH¢16.3 billion ($1.4 billion) from domestic investors to fund cocoa purchases for the upcoming season, according to a government presentation to investors.

The national regulator is turning to domestic debt markets to fund its operations after struggling to finance ​the sector since its decade-old syndicated loan arrangement with international banks collapsed during the 2023/24 ​season.

A separate arrangement under which international trading houses pre-financed purchases fell through last ⁠season, contributing to delays in payments to farmers.

Farmers and buyers have blamed funding challenges for uncertainty over ​the timing of the new season.

Cocoa Capital PLC, a new special purpose vehicle, is expected to issue ​a first tranche of debt to raise funds this week, comprising a 2.3 billion cedi bond and 4 billion cedi in commercial paper.

Commercial paper with tenors of up to 270 days will be used to finance seasonal cocoa purchases, ​while bonds with a maturity of up to five years will be used to refinance existing short-term ​debts held by COCOBOD, according to the presentation made last Thursday.

Ghana's cocoa buyers last week said they were owed about ‌4 ⁠billion cedis by COCOBOD for last season’s crop, and want it paid before the new crop year begins. The Chamber of Cocoa Marketers, which represents the country’s licensed cocoa buyers, also warned that financing may not yet be in place to fund purchases once the season opens.

NEW SEASON NOT YET STARTED

Ghana ​and Ivory Coast, the world’s ​two biggest cocoa ⁠producers, agreed in June to harmonise their farmgate prices and season start dates, following a meeting between the two countries’ presidents.

While Ivory Coast's season opened on September 1, ​Ghana is yet to announce a start date.

Debt repayments will be backed ​by assigned ⁠cocoa export receivables generated from selected forward sales contracts, the presentation showed.

Eligible participants include commercial banks, pension funds, insurance companies, stockbrokers, high-net-worth individuals, other institutional investors and international cocoa buyers.

COCOBOD did not respond to a request ⁠for ​comment on the new issuance.

It said on X last week that ​the government had engaged investors, describing the planned issuance as a shift towards mobilising Ghana’s domestic capital market to finance the ​cocoa sector.

DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.

Tags:  

DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.