Angola to issue US$8 billion government bonds

LUANDA – Angola will issue 60 billion kwanzas (US$8 billion) of government bonds this year to help finance its reconstruction programme given falling revenue from its two main exports, oil and diamonds, the finance minister said yesterday.

Angolan Finance Minister Severim de Morais told Radio Nacional de Angola the bonds will be issued in kwanza indexed to the US dollar, meaning investors are not exposed to the risk of a possible kwanza devaluation.
The kwanza is pegged at around 75 to the US dollar.
The maturities of the bonds vary between one and four years with yields based on the Libor interest rate, with a premium that varies between three and 4,5 percentage points, de Morais said.
The bonds will be sold to banks and to the public in general by the central bank, Banco Nacional de Angola. Banks operating outside Angola will be able to buy these bonds only if they get prior approval from the central bank.
‘This issuance is not exclusive to the banking system but also to all of society that has savings in kwanzas or dollars,’ he said. ‘This measure is important for monetary stability and for our budget.’
Banco Nacional de Angola plans to issue bonds worth US$120 million this month.
World Bank senior analyst Ricardo Gazel said these bonds should help finance Angola’s US$42 billion reconstruction programme following the end of a civil war in 2002 amid falling demand and revenues for its two main exports – oil and diamonds.
‘As oil prices remain low, government revenues decline, and new sources of financing are needed,’ Gazel told Reuters.
‘Government bonds have good acceptance in the domestic market and the government should use this instrument to partially finance its reconstruction programme.’
Angola’s last government bond, totalling US$1 billion, was issued at the end of 2007. The African nation has since issued short term-debt in the form of treasury bills.
– Nampa-Reuters