Harare - Oil rich Angola has issued Eurobonds worth $1.5bn aimed at establishing long term funding and external financing sources as the country bids to diversify its economy from oil, whose prices have been softer in the past few years.
The London Stock Exchange hosted the Angolan bond issue, a culmination of efforts started in 2011 to limit the country’s risk exposure to bilateral, commercial and credit facilities and the need to cultivate other external funding source.
According to an official statement on Monday, the Angolan government engaged Goldman Sachs, JP Morgan and the World Bank for guidance as well as in enhancing its credit rating by agencies. This determined that a sovereign bond issue “would potentially contribute significantly to enhancing the country’s image abroad”.
This would also help the country to improve transparency in public finance management, deemed essential in determining “the solvency indicators of a country to honour its debt” commitments. The bond issuance provides Mozambique with the opportunity to establish “long term relationships with international investors”.
It also gives the southern African country a positive impact in the evaluation of rankings by credit rating agencies. Angola will be able to get “access to global bond markets”.
Angola has been urged to diversify its economy and cultivate other measures of revenue generation as oil prices continue to be sluggish. Export revenues for the Angolan state oil company, Sonangol declined by as much as 44% in September compared to the same month in 2014.
President Jose Eduardo Dos Santos has granted a letter of mandate authorising Goldman Sachs, Deusche Bank, the Industrial and Commercial Bank of China to undertake agency work in the issuance of the sovereign bonds.
Angola is charming up international financiers and bilateral funders, with China being the latest to come up with a new credit line that has increased grants to the southern African country to nearly $20bn, according to the Economist Intelligence Unit (EIU).
The announcement of this figure ends months of speculation after the president’s visit to China and brings the total value of Chinese loans taken on by Angola to nearly $20bn,” the EIU said in a recent report on Angola’s economy.