President of Angola authorises issuance of public debt in euro-bonds

20 March 2020

Angola is preparing to take on more public debt with the issuance of euro-bonds up to the amount of US$3 billion, in order to finance the budget deficit which is expected to increase due to the fall in the price of  oil, financial news agency Bloomberg reported.

The Agency cited a presidential decree of 18 March which authorises the minister of Finance, Vera Daves, to hire banking entities to set up the operation without, however, naming a precise date.

Most of the US$8 billion in debt is denominated in dollars and is in the hands of European and American investors, and Alliance Bernstein LP, BlackRock Inc. and Aviva Plc hold the highest amounts, according to data compiled by the agency.

However, Bloomberg quoted investors such as Aberdeen Standard Investments and Federated Hermes as saying that the issuance of debt in the near future would not be successful.

The President of Angola, a country whose exports are more than 90% focused on oil, recently said it may become necessary to review all economic forecasts, in particular those related to the State Budget, due to the fall in the price of a barrel of oil and the Covid-19 pandemic.

João Lourenço, in a speech at the third ordinary session of the Central Committee of the MPLA party which has governed Angola since the country’s independence, acknowledged that “the price of crude oil had never seen such an abrupt drop in such a short space of time as now.”

The previous issue of euro-bonds took place in November 2019, when Angola placed US$3 billion on the international market in two tranches with different maturities on the financial market in London.

A tranche of US$1.75 billion with a 10-year maturity was issued with a coupon of 8.0%, and the second, of US$1.25 billion and maturity of 30 years, had an interest rate of 9.125%. (macauhub)