Cocoa Bills Maturity: Investors anxious over possible failure to honour payment obligation
Holders of the 182 day Cocoa bills are anxious over the possible failure of COCOBOD to honour payment obligations as the short term debt instrument matures on Friday, February 10, 2023.
The anxiety among investors is caused by doubts over the ability of COCOBOD to honour the matured debts as the industry regulator defaulted on maturity payments for which it had to sought permission from the Bank of Ghana to unilaterally rollover matured cocoa bills last month without prior notice or consent of investors.
Investor concerns about the possible inability of COCOBOD to honour its debt obligations is due to the restriction of the BoG by the IMF to halt financing of the cocoa bills as a condition for the approval of the $3bn Fund-backed programme being sought by the Government of Ghana.
The cocoa bills set to mature on Friday, February 10, 2023, was issued on August 9, 2022 at an interest rate of 30%.
COCOBOD, Banks agree to cover shortfall in Cocoa Bill investments
After defaulting on maturity payments to investors last month, the BoG, COCOBOD and the various banks in the country agreed to make payments to investors.
In a statement, the BoG announced that COCOBOD and the various banks in the country have agreed to allow banks to use COCOBOD’s deposits/placements held at the various banks to cater to retail customers who may not want a rollover of their cocoa bills.
According to the BoG, the directive for banks and investment firms to roll over the matured debt security was due to the severe undersubscription of the recently issued cocoa bills, resulting in a shortfall of GHS 855m ($138m) against the target of GHS 940m.
The BoG stated that it was not aware that the short-term debt security had been sold to retail investors as it was meant to be held by financial institutions only.
It added that it expects the short-term cash flow challenges facing COCOBOD to be resolved soon, enabling the industry regulator to meet its obligations to investors.
It further noted that, COCOBOD has assured the BoG that the outlook for the 2023 crop season is positive and cocoa purchasing is ahead of last year.
