Thwarted by the global financial crisis in 2009 and debt arrears in 2011, the chance of Angola launching a debut eurobond are better third time around thanks to its booming oil economy and foreign hunger for African debt.
“For foreign investors it [a eurobond] would be a way to play the Africa story, which is very positive, and specifically Angola, a very strong growth performer,” said Victor Lopes, an economist for sub-Saharan Africa at Standard Chartered.
Angola, which is Africa’s biggest oil producer after Nigeria, plans to raise $1 billion (R9 billion) through a eurobond issue this year.
Angola’s economy expanded 7.4 percent last year, thanks to a recovery in oil output after technical problems. The government forecasts growth of 7.1 percent this year.
When Angola raised $1bn last year in a private placement of seven-year paper via a Russian bank, market sources said the deal was opaque but added that it was well subscribed.
“It was a way of introducing themselves to investors. They’re in a better position after that to do a plain vanilla eurobond,” said Stephen Charangwa, a fixed income portfolio manager at Silk Invest in London.
Angola’s plans are likely to have been encouraged by a successful sale by Zambia in September.
Zambia’s debut $750m eurobond attracted feverish demand – oversubscribed 15 times and sold at a yield of 5.625 percent, underscoring investors’ appetite for high-yielding African assets.
“Maybe this will be a good time for Angola, especially after Zambia’s successful bond issue showed clearly that there is strong demand for African government bonds,” Lopes said.
Other African countries are also seizing the opportunity. Kenya plans to sell a debut $1bn eurobond in September, Nigeria is planning its second issuance and Ghana is mulling re-financing one bond and issuing another.
Lopes added that Angola had strong creditworthiness indicators, including a better credit rating than Zambia.
The medium-term outlook is also positive as the country aims to ramp up crude output to 2 million barrels a day in 2015 from 1.75 million barrels a day last year. That presents a stark contrast to 2009, when Angola cancelled plans to issue $4bn in eurobonds after oil prices slumped, causing a sharp economic slowdown. – Reuters