Angola’s debt issue of up to US$2.6 billion eagerly awaited

31 March 2014

Angola plans to take advantage of the interest it has attracted from international financial investors to net up to US$2.6 billion, which it plans to use to build infrastructure, according to the Economist Intelligence Unit (EIU).

In its latest report on Angola, the EIU said there was “interest from investors in increasing their exposure to Angolan debt,” in a scenario that allows “the Angolan government to capitalize on a favourable macroeconomic climate,” after delayed payments accumulated in 2008 and 2009 have been practically paid off.

A new 20-year bond issue is now on the cards, to the value of US$600 million, which has already been publically presented by the Angolan government.

The government also said that it planned to use the funds “to increase the financing capacity of the Angolan Development Bank (BNA),” particularly for infrastructure projects, but also to allow the BNA to “comply with requirements for needs for capital,” as well as  “financing monetary policy operations and supporting budget expanses,” the EIU said.

At a time when Angola is followed by the main international credit risk agencies, the operation may, however, “suffer delays” similarly to the Eurobond issue planned since 2009, the EIU said.

The sale of Eurobonds worth up to US$2 billion was planned in 2009 when the country was facing financial difficulties due to a drop in the price of oil. The issue was successively delayed, first until 2011 and then to 2013, and it is now expected to take place in the second half of this year.

The use of international financial markets is in addition to credit lines provided by partners such as China and Brazil, which have allowed Angola to launch infrastructure projects that are essential to the development of vast tracts of the country.

Opening the way to investment in Angolan stocks the three main international credit rating agencies in 2010 rated Angola’s sovereign debt for the first time. Standard & Poor´s, Fitch Ratings and Moody’s all gave Angola’s debt the same rating of B+ for the former two agencies and B1 by the latter.

Inflation is expected to remain at below 10 percent for the second consecutive year, which is a reflection of the exchange rate stability of Angola’s currency as well as a more consistent monetary policy. (macauhub)