Financial markets show renewed interest in Angola

21 January 2013

The creation of the Angola Sovereign Fund and an international debt issue organised by Russian bank VTB have led to renewed interest from financial markets in Angola, according to the EMEA Finance website.

With economic growth speeding up, to almost 8 percent in 2012 and 2013, and Angola’s sovereign debt being rated by Fitch, Moody’s and Standard & Poor’s, the markets are now waiting for new Treasury bonds to be issued, following a number of delays, the website said.

“The news of the Angolan sovereign fund and of the launch of new bonds [from VTB] is renewing investor interest in the country,” said EMEA Finance in an analysis published last week with the title, “Angola: Gaining Impetus.”

In the middle of last year Russian bank VTB granted a loan to the Angolan government, which later issued debt securities on the secondary financial market.

As a result US$1 billion in Angolan securities were being negotiated on international markets in August.

Despite a euro-bond issue, which is expected to be led by JP Morgan, having been revised from US$4 billion to US$500 million, the operation has yet to be set up.

Despite not being “the opportunity that international investors were expecting,” the securities issued by VTB “are trading well and are went up in value in the weeks after being issued,” which suggest that, “when Angola carries out a proper issue it will be well-received,” EMEA Finance said.

According to the EMEA analyst, even more significant was the announcement of the creation of the Angola sovereign fund, which will invest part of the country’s oil revenues, managing assets estimated at US$5 billion or the equivalent of 5 percent of Angolan GDP.

Capital will be invested in infrastructure projects in Angola and other countries, financial assets and a number of business sectors.

According to Edward George, of Ecobank, this is a “very welcome” step and the fund is notable for its size compared to African countries such as Equatorial Guinea, which has applied US$80 million, making it second only to Botswana.

“As a start, it is a strong statement of intention and definitely what Angola should do with its oil revenues,” said George.

Credit rating agencies consider the fund to be a positive measure for Angola’s credit rating, as it is a sign the government is managing its oil revenues sustainably.

“The next challenge for Angola is to capitalise on growing interest from investors,” said EMEA Finance.

Euro-bonds are due to be issued soon along with the launch of the Angolan stock exchange, six years after the project was originally launched, and it is hoped that local banks will be some of the first to float their shares as a way of funding their expansion.

“There are many projects and a clear intention from the government to become more sophisticated and develop the economy and capital markets,” said Pedro Pinto Coelho, chairman of the Standard Bank of Angola, who also noted the need to overcome difficulties such as a lack of human resources with the necessary qualifications.

“The economy is growing in a very robust way, driven by high oil prices, making it a force to be considered by the international community. It has become an attractive, competitive, community and a hub for international investment,” said António Gaioso Henriques, chairman of Banco Millennium Angola. (macauhub)