PREVIEW
Finance Ministry to approach IMF for funds as debt matures
The average yield on Angola’s dollar bonds has soared above 13.5% in recent weeks, prompting Finance Minister Vera Daves de Sousa to shelve plans to test the Eurobond market. Instead, she is opening talks with the IMF on a loan to explore ‘financial options’ with $864m due on a bond set to mature in November (AC Vol 66 No 9, Vera Daves de Sousa, Angola’s trailblazer).
These latest moves reflect the growing financial pressure on Angola’s economy amid falling prices for its oil and gas exports but higher servicing costs for its debt stock.
With a new Eurobond out of the question under current market conditions, De Sousa has been trying some innovative financing techniques as a stop gap before the IMF negotiations start.
The Treasury in Luanda says that a US$1 billion loan it secured from J.P. Morgan, which was the subject of a $200 million margin call during a market sell-off caused by United States tariffs, cost just below 9%, significantly less than what the country would have paid for conventional debt.
The loan, which is known as a Total Return Swap, was paid in two tranches of $600m and $400m last December but has only just been disclosed by the finance minister.
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