(Bloomberg) -- Angola’s international bonds outperformed most of their emerging-market peers on Friday as investors reacted to the nation’s latest borrowing to address budget gaps and looming bond maturities.
The $1.2 billion of 2030 bonds, sold on Dec. 27, rose above their listing price as of 2 p.m. London time, while Angola’s other eurobonds posted some of the biggest gains in the Bloomberg EM Sovereign Total Return Index. The yield on the note due November 2049 fell 13 basis points to 11.35%, their lowest level in two weeks.
The new bonds, carrying a coupon of 10.95%, were privately placed under Angola’s Global Medium Term Note Programme, according to an official document seen by Bloomberg. The deal, structured as a total-return swap financing transaction, points to the nation’s intricate efforts to manage one of sub-Saharan Africa’s largest debt burdens. Angola will transfer the notes with full legal title to J.P. Morgan Securities Plc in exchange for $600 million in financing.
“This looks like overcollateralised borrowing by the authorities with a contingent liability,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank. “Given the structure of the 2030 notes, they may not trade actively in the market other than on a potential recovery metric,” he said.
Angola owes $864 million on a bond maturing in November, while external debt accounts for about 70% of its gross domestic product, according to S&P Global. Moody’s Ratings grades the nation at B3, and S&P assigns it a B-.
The nation is attempting to diversify its borrowing strategies. Angola signed a pact with Oman to plan sovereign debt issuance in the Gulf Cooperation Council region and is reviewing a proposal from The Nature Conservancy for an environmental bond aimed at reducing its debt burden.
African nations including Ivory Coast, Cameroon, Senegal, Benin, South Africa and Kenya, returned to global markets in 2024 after being sidelined by rising borrowing costs for over two years.
A London-based spokesperson at JPMorgan declined to comment. Angola’s finance ministry did not immediately respond to requests for comment.
--With assistance from Mpho Hlakudi, Selcuk Gokoluk and Monique Vanek.
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