BY ISSAH OLEGOR
The Ghana Cocoa Board (COCOBOD) has raised approximately GH¢3.39 billion through its first commercial paper issuance under a new domestic financing programme, marking a significant step in efforts to diversify funding sources for the country’s cocoa industry and reduce reliance on traditional external financing arrangements.
The funds were mobilised through Cocoa Capital PLC, a wholly owned subsidiary of COCOBOD, under a GH¢16.3 billion Domestic Cocoa Notes Programme designed to raise money from the local market to finance cocoa purchases and meet other funding requirements across the sector.
The inaugural issuance involved a 266-day senior unsecured commercial paper, which was subsequently admitted to trading on the Ghana Stock Exchange.
Speaking at the admission ceremony, COCOBOD Chief Executive Officer Ransford Abbey described the transaction as an important development in the financing of Ghana’s cocoa industry, highlighting the potential of domestic capital markets to support strategic sectors of the economy.
He said the transaction demonstrated what could be achieved through stronger collaboration among public institutions, regulators, capital-market participants and domestic investors.
The offer attracted bids of approximately GH¢3.586 billion from 38 institutional investors, reflecting demand that exceeded the amount ultimately accepted by Cocoa Capital PLC.
The company accepted 36 successful bids worth approximately GH¢3.396 billion at a clearing yield of 11 per cent.
The difference between the total bids received and the amount accepted indicates that not all offers were allotted securities under the issuance.
Randy Abbey said the level of investor participation demonstrated confidence in the cocoa sector and the structure of the financing arrangement. He also pointed to the capacity of Ghana’s domestic investment market to mobilise substantial funds for strategic economic activities.
The issuance comes as COCOBOD seeks to diversify its funding sources and strengthen its financial resilience amid the financing demands associated with purchasing cocoa from farmers.
Traditionally, cocoa purchasing operations have relied heavily on external financing arrangements. The new programme is intended to broaden the available funding options by mobilising domestic savings through the capital market.
Under the arrangement, Cocoa Capital PLC can issue domestic cocoa notes to investors, with proceeds intended to support cocoa purchases and other funding requirements within the sector.
The programme has an overall size of GH¢16.3 billion, providing a framework for raising funds through domestic capital-market instruments beyond the inaugural transaction.
A key feature of the Domestic Cocoa Notes Programme is the assignment of selected receivables from executed cocoa forward-sales contracts to Cocoa Capital PLC.
These receivables provide a defined source of expected collections within the financing arrangement. According to the programme structure, proceeds from the assigned receivables are channelled through designated ring-fenced accounts and distributed according to an agreed payment waterfall.
A ring-fenced account is designed to keep specified funds separate for defined purposes, while a payment waterfall sets out the order in which available funds are allocated to meet obligations.
The structure is intended to establish greater clarity around the collection and management of funds and the settlement of payment obligations associated with the notes.
However, the commercial paper is described as senior unsecured, meaning it is not backed by a specific asset pledged as collateral for the instrument. Investors therefore remain exposed to the relevant credit and repayment risks under the terms of the issuance.
The programme’s effectiveness will depend on the performance of the underlying receivables, the management of collections and COCOBOD’s ability to meet the obligations arising from funds raised.
