Angola to issue US$2 bln Eurobond
Angola will prioritise repaying invoices dating to 2014 and totalling more than US$4.9 billion owed to companies.
Stephen Eisenhammer - Angola plans to issue a Eurobond and renegotiate bilateral debt in 2018 as part of measures aimed at restructuring the economy and controlling mounting debt payments, a government macroeconomic plan seen by Reuters showed.
The government earlier put the Eurobond's size at US$2 billion. Banking sources say the Eurobond should be issued within the first quarter.
The 70-page "Macroeconomic Stabilisation Plan" proposes that "necessary actions for the emission of Eurobonds" should be taken in the first half of 2018.
It adds that Angola will prioritise repaying invoices dating to 2014 and totalling more than 1 trillion kwanza (US$4.9 billion) owed to companies.
It also showed that total debt for sub-Saharan Africa's third largest economy reached 12.5 trillion kwanza in 2017, up from 5.9 trillion kwanza in 2014.
"The trajectory of the debt is, at this moment, passing the limit of sustainability," the document said. "All the effort needed to keep it sustainable must be made," it said.
An oil boom made Angola one of Africa's richest countries per capita but it is also one of the world's most unequal. The economy fell into recession in 2016 due to a fall in the oil price and unemployment is at least 25%.
A lack of foreign currency has forced companies, such as airlines and oil services, to pull back operations.
The oil production which previously supported borrowing can, however, no longer be relied upon, the plan says.
"That instrument has been exhausted, as oil shipments have been completely committed to the servicing of debt with three countries: China, Brazil and Israel."
The plan also calls for a tightening of the gap between the official and black market exchange rate in Angola where US dollars trade for two or three times more on the street than in the banks.
Angola's central bank abandoned a kwanza peg against the US dollar earlier this month which has already seen the currency weaken by more than 20%. Banking sources expect the kwanza to weaken to 280 against the Euro in the coming weeks.
President João Lourenço took power in September and is seeking to win credibility with international investors and shed Angola's image as an opaque oil economy with rampant corruption. – Nampa/Reuters
The government earlier put the Eurobond's size at US$2 billion. Banking sources say the Eurobond should be issued within the first quarter.
The 70-page "Macroeconomic Stabilisation Plan" proposes that "necessary actions for the emission of Eurobonds" should be taken in the first half of 2018.
It adds that Angola will prioritise repaying invoices dating to 2014 and totalling more than 1 trillion kwanza (US$4.9 billion) owed to companies.
It also showed that total debt for sub-Saharan Africa's third largest economy reached 12.5 trillion kwanza in 2017, up from 5.9 trillion kwanza in 2014.
"The trajectory of the debt is, at this moment, passing the limit of sustainability," the document said. "All the effort needed to keep it sustainable must be made," it said.
An oil boom made Angola one of Africa's richest countries per capita but it is also one of the world's most unequal. The economy fell into recession in 2016 due to a fall in the oil price and unemployment is at least 25%.
A lack of foreign currency has forced companies, such as airlines and oil services, to pull back operations.
The oil production which previously supported borrowing can, however, no longer be relied upon, the plan says.
"That instrument has been exhausted, as oil shipments have been completely committed to the servicing of debt with three countries: China, Brazil and Israel."
The plan also calls for a tightening of the gap between the official and black market exchange rate in Angola where US dollars trade for two or three times more on the street than in the banks.
Angola's central bank abandoned a kwanza peg against the US dollar earlier this month which has already seen the currency weaken by more than 20%. Banking sources expect the kwanza to weaken to 280 against the Euro in the coming weeks.
President João Lourenço took power in September and is seeking to win credibility with international investors and shed Angola's image as an opaque oil economy with rampant corruption. – Nampa/Reuters
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