GCB Bank PLC Ghana has raised an amount of US$117 million syndicated trade finance facility from a group of eight lenders. The facility was oversubscribed by more than double its initial launch amount of US$50million.

Rima Kalai, an Executive Director at Africa Trade Finance, disclosed that the pool of lenders are largely composed of banks based in the UK, Switzerland, North Africa, South Africa, the Gulf Cooperation Council region, and the US.

The bookrunners who were the principal underwriters and co-ordinators of the facility include: London-based alternative trade finance, Africa Trade Finance, while First Abu Dhabi Bank served as agent.

According to the Executive Director at the Africa Trade Finance, the proceeds are expected to support the trade of various goods, including: soft commodities, metals, energy, as well as machinery and equipment.

Mr Rima Kalai disclosed that the deal has a tenor of six months, but quick to add that “it contained a rollover option to extend further.” For the time being, Dentons and Bentsi-Enchill Letsa & Ankomah are acting as legal counsels on the transaction.

Christian Karam, Director of Africa Trade Finance, stated that the commitments by the lenders are a result of the borrower’s strong liquidity and its position in a sector where major financial institutions remain a “good and safe risk”.

Market Sentiment Remains Subdued

The Director of Africa Trade Finance opined that the overall market sentiment remains subdued in Ghana, with country limits having been reduced following the ratings agencies downgrade of the Ghanaian sovereign, a change which also affected the commercial banks in the country.

“The deal comes at a time when Ghana is experiencing a tight credit stance reflecting the emerging challenging operating environment, including the general slump in economic activity from the impact of the pandemic, measures to contain the virus, resultant temporary closures, and anticipated loan repayment challenges.”
Christian Karam

Last week, ratings agency Moody’s announced it was downgrading Ghana from B3 to CAA1, citing the “increasingly difficult task government faces in addressing the intertwined liquidity and debt challenges”.

The downgrade affected the GCB Bank PLC, as Moody’s Investors Service (Moody’s) downgraded GCB Bank PLC’s global long-term deposit ratings to Caa1 from B3 and lowered its Baseline Credit Assessment (BCA) and Adjusted BCA to caa1 from b3.

“Today’s downgrade of GCB’s deposit ratings to Caa1 reflects primarily the sizable holding of sovereign debt securities, at around 3.8 times its shareholders’ equity and 55% of total assets as of September 2021, which links GCB’s creditworthiness to that of the government.”
Moody’s

Recently, Africa Trade Finance has previously extended support to another commercial lender in Ghana, Cal Bank.

Africa Trade Finance served as a sole co-ordinator and bookrunner on a deal which saw CalBank secure US$100million from a group of 14 lenders. Mr Karam indicated that the move was significant at the time, as commercial lenders had historically turned to development finance institutions or bilateral bank relationships to secure trade finance funding.

According to Africa Trade Finance, CalBank recently signed its syndicated trade finance facility for the fourth consecutive year, in an oversubscribed US$128mn deal which was disbursed in November last year.