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COCOBOD to issue US$2bn bond to improve liquidity position

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Adnan Adams Mohammed
The Ghana Cocoa Board (COCOBOD) is planning to issue a US$2 billion to improve on the liquidity strength of the board. If it happens, it would improve the country’s balance of payment, support the cedi and also increase the reserve.

The bond has a repayment period of about twenty years. It is to be used to clear outstanding debts on the books of COCOBOD and also reduce the company’s finance cost in the long term, Deputy CEO in Charge of Finance and Administration, Ray Ankrah.

This is to help COCOBOD to renew confidence amongst its lenders and sustain its role in developing Ghana’s cocoa sector. Already, talks are ongoing towards the issuance of the bond, which is likely to be before the next cocoa season in October this year, though the actual date for the issuance not yet known.

“The bond will enable us to take up some of the legacy debts that we inherited. Some of the previous debts were issued at very high interest rates and that is a challenge for COCOBOD. So we are having discussions with various institutions and there is interest in these areas. So the institutions are engaging with us to see how best we can structure something so we can secure some money from the international market to take care of some of our local cocoa bills,” Mr. Ankrah explained to media at a meeting with the Executive Management team of Standard Bank Group.

COCOBOD for some periods now has been pre-financing the purchasing of cocoa beans from farmers through syndicated loan mostly in partnership with a group of banks which grant credit for the purpose.

COCOBOD recently secured US$1.3 billion from a twenty-one banks including the Standard Bank Group to finance the purchasing of beans in the just ended crop season.

Addressing the delegation on COCOBOD’s finances, the Deputy CEO said the board was looking “very much into the future and asking some hard questions.”

“When we get the annual syndication, it takes care of the cocoa purchases and our operational expenses, but we have also inherited some legacy issues in terms of cocoa bills that need to be taken care of,” he stated.

The cocoa bills are mostly short-term instruments, with tenures not exceeding three years, which are issued by the board to raise funds for its operations.

The Deputy CEO said: “We have quite a number of them on our balance sheet that we need to take care of to give ourselves the financial space that we need so that we can re-invest a lot of these money in some of the productive enhancement programmes (PEPs) to ensure that cocoa has a very sustainable future.”

“We are looking for long-term financing so we are considering bringing in a long-term bond and we are looking in the region of $1.5 billion to $2 billion for 10 to 20 years to help us pay off the cocoa bills,” he added.

He said that would help COCOBOD to reduce its financing cost.

“If we can pull this off, then we will be able to reduce our reliance on our annual syndication,” he said. He said the long tenure of the bond would also mean that COCOBOD would require a lesser amount of the cocoa bean as collateral.

The head of the delegation from the Standard Bank Group said the visit was borne out of the bank’s purpose which was to drive economic growth in Africa.

“We are not here just to bank Africa, but the purpose resides in the fact that we see Africa as an entire continent and a home and we are here to drive its growth,” he stated.

“We are also here as an executive team to learn about how we can play our role in making this our home and be able to drive the growth of Africa.

“We are on a journey to learn around these things so that as an executive, we can help transition the bank into one that can really drive Africa’s growth,” he noted.

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