Lack of rating makes issuing public debt in Angola more expensive

18 November 2009

Lagos, Nigeria, 18 Nov – Angola will have to pay out exceptionally high interest in order to carry out its US$4 billion bond issue, according to Russian investment bank Renaissance Capital.

“It will be difficult to place bonds without a rating, unless they pay back [investors] in a very attractive way to make up for this,” Samir Gadio, an analyst from Renaissance Capital, one of Russia’s main investment banks operating in emerging markets, said in Lagos Tuesday.

Ratings are given by specialised ratings companies such as Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, which have yet to evaluate Angola’s debt.

According to the Renaissance analyst in Lagos, Nigeria, cited by the Bloomberg news agency, “it would make more sense to first find a rating,” but Angola has already said it will not wait.

Thus Angola may have to pay out a higher return than on any bond in the sub-Saharan African region, and this must be of between 9 and 9.5 percent.

The operation, the first of its size organised by Angola on an international level, is intended to fund construction projects at a time when the country is still dealing with the effects of lower oil prices.

The bond is issue is the responsibility of JP Morgan Chase, which will offer the bonds in two stages, the first in December of this year and the second in June 2010. (macauhub)

MACAUHUB FRENCH