The Ghana Cocoa Board (Cocobod) has fired back at a report claiming that banks are refusing to underwrite the risk for its annual billion-dollar syndicated loan over Covid-19 uncertainty, saying it is “simply not accurate”.

Joseph Aidoo, chief executive of Cocobod, says the report, which suggests that Cocobod’s financial partners are reluctant to raise funds for the 28th annual pre-export finance loan to fund the 2020-21 cocoa season purchases due to risks associated with the Covid-19 pandemic, is not correct.

The report, published on June 17 by Reuters, quotes an unnamed banker as saying: “Banks are not willing to take the underwriting risk. It will be a club loan with a group of around 12 or 13 banks, with a couple of banks acting as co-ordinators. This will be the first club style deal Cocobod has done since the financial crisis.”

Often raising more than US$1bn, the annual Cocobod loan is underwritten and arranged by a handful of banks, before being syndicated to a wider group of lenders. While it has been considered a relatively low-risk way to gain exposure to Africa in the past, the report says that Covid-19 has meant banks have “shied” away from underwriting on this year’s financing round.

It also says that more competitive pricing is needed. “Last year’s deal was just not appealing, it was priced too low for us,” a second anonymous banker is reported to have said.

In September 2019, Cocobod signed an oversubscribed US$1.3bn pre-export finance facility with 24 banks, priced at 55 basis points over Libor, according to a spokesperson for Cocobod. It was led by Ghana International Bank, MUFG Bank, Natixis, Nedbank, Rabobank and Société Générale.

When asked by GTR whether they will be involved in this year’s facility, MUFG, Nedbank and Société Générale declined to comment. Ghana International Bank, Natixis and Rabobank were unavailable for comment at the time of publishing.

Aidoo claims the Reuters report does not depict an accurate picture. “[It does] not reflect the current state of engagements between Cocobod and its financial partners,” he said on June 23. “Cocobod issued requests for proposals in February 2020 to international banks to raise the funds for the 2020-21 cocoa purchases.

“On June 12, the financial institutions including Cocobod’s traditional banks submitted their proposals,” he added.

An evaluation of the proposals was held on June 18 by an in-house committee chaired by the chief executive with representatives from the ministry of food and agriculture, the ministry of finance and the Bank of Ghana, Cocobod reveals in a statement.

The cocoa authority and its financing partners expect to complete negotiations and ink an agreement in September – the same month the facility has been announced in the past few years.

The statement adds that Cocobod paid its 2019-20 syndicated loan facility earlier this month, three months ahead of schedule.

In September 2019, when the deal was announced, Aidoo boasted Cocobod’s pre-export loan repayment track record. “Repayment of the 2016-17 facility was scheduled to be completed by end of August 2017. However, the Ghana Cocoa Board was able to finish repayment by end of July 2017. Similarly, the 2018-19 facility was fully repaid in July 2019, ahead of the scheduled date of August 2019. I am, therefore, not surprised that the 2019-20 facility was oversubscribed.”