Cocobod pitches $1.4 billion domestic financing plan

The Ghana Cocoa Board (COCOBOD) is proposing a $1.4 billion financing plan to be sourced from domestic investors for the upcoming cocoa season, as disclosed in a recent government presentation to investors. This shift in financing strategy comes after the sector struggled to secure funding due to the collapse of a decade-old syndicated loan with international banks during the 2023/24 season and the failure of an arrangement where international trading houses pre-financed purchases.

The new plan involves a 2.3 billion cedi bond and 4 billion cedi in commercial paper provided by Cocoa Capital PLC, a special purpose vehicle. Tenors for the commercial paper range from up to 270 days, intended for financing seasonal cocoa purchases, while bonds with maturities up to five years will be utilized to refinance COCOBOD's existing short-term debts.

This move follows a government presentation to investors last Thursday. However, Ghana's cocoa buyers recently reported being owed around 4 billion cedis by COCOBOD for the previous season's crop and are demanding payment before the new crop year commences. The Chamber of Cocoa Marketers, representing licensed cocoa buyers in the country, has expressed concerns over the availability of financing to cover purchases when the season starts.

The new season has not yet commenced, with Ghana and Ivory Coast, the world's largest cocoa producers, agreeing in June to synchronize their farmgate prices and season start dates. Despite this, Ghana has yet to announce an official start date. The presentation revealed that debt repayments will be secured through assigned cocoa export receivables from selected forward sales contracts.

Investors eligible to participate in this issuance include commercial banks, pension funds, insurance companies, stockbrokers, high-net-worth individuals, other institutional investors, and international cocoa buyers. COCOBOD has not provided a comment on the new issuance, but it previously announced on X that the government had engaged investors, describing the planned issuance as a move towards mobilizing Ghana's domestic capital market to finance the cocoa sector.