Glencore Should Rework Chad Loan, Says World Bank’s Malpass

(Bloomberg) -- Glencore Plc and its syndicate of lenders should renegotiate their more than $1 billion oil-for-cash loan to Chad to make the nation’s debt sustainable, World Bank President David Malpass said.

The world’s biggest commodities trader and other commercial lenders should be included in talks with the central African nation under the Common Framework -- created by the Group of 20 leading economies to get private creditors involved in debt relief alongside public lenders. Chad is one of three countries out of 73 eligible that’s seeking relief under the framework.

“By far the biggest amount of reschedulable debt is with Glencore and it is very important to engage in that debt sustainability effort for Chad,” Malpass said in a virtual media roundtable Thursday. Malpass has repeatedly called for private creditors to participate in Chad’s debt-relief efforts, but it’s the first time he’s singled out Glencore.

Chad owes Glencore and its syndicate of lenders more than $1 billion, with Glencore’s portion worth $347 million, according to the company’s latest Payments to Governments Report. Glencore restructured the loan in 2015 and again in 2018 after oil prices fell.

A Glencore spokesman said the company wouldn’t comment on Malpass’s remarks.

President’s Death

Oil and foreign donations are the lifeline of Chad, one of the world’s poorest countries. The death of President Idriss Deby last month cast uncertainty over the government’s plans to repay the loan, which makes up a third of the country’s public external debt.

Deby died of injuries sustained in a battle against rebels shortly after being re-elected for a sixth term, the military said on April 20. His son, General Mahamat Idriss Deby, has replaced him and heads a 15-member military council that will lead the former French colony for the next 18 months.

Glencore, backed by banks, loaned the government and state-run Société des Hydrocarbures du Tchad nearly $2 billion between 2013 and 2014 to plug a budget deficit and buy a stake in an oil project, according to the International Monetary Fund.

The debt was repaid by crude shipments through a resource-backed agreement that enables countries with limited access to capital markets to obtain loans. Such accords have been criticized by advocacy groups including the New York-based Natural Resource Governance Institute, which argues they’re often hidden from public view and removed from government books.

Chad used cattle to repay debt to Angola in 2019 and is in talks with Equatorial Guinea to settle another loan with fresh meat.

The G-20 framework aims to help poor countries struggling to repay their debt amid the coronavirus pandemic to either reschedule or restructure their external obligations. Under the plan, debtors are committed to seek similar terms of the resulting bilateral restructuring with private creditors.

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