Angola heads to bond markets, Sonangol plans delayed – Finance Minister

Angola will return to international capital markets this year to sell Eurobonds, finance minister Vera Daves de Sousa said on Monday, while the partial privatisation of state-oil firm Sonangol could take another two years.

The southern African nation last issued dollar bonds in late 2019 to fund its ambitious reforms, but saw yields spike to around 30% during the COVID-19 market rout in March 2020. It suffered a series of downgrades that drove its sovereign rating into the “substantial risk” category.

With borrowing costs having come down, the government is looking to cover part of its $4 billion external funding needs through bond sales.

Daves de Sousa told Reuters in an interview that Angola was working to improve its credit rating to lower borrowing costs and help broaden its creditor base.

“We are putting all our efforts on that, we are doing our best on the structural reforms that we need to implement,” she said.

Ratings agency Fitch on Friday upgraded Angola to “B-” from “CCC” – following Moody’s, which did so in September. S&P Global Ratings still rates it “CCC+”.

Amid a push to diversify the OPEC producer’s economy away from hydrocarbon extraction, its main source of revenue, Angola is also looking to issue an ESG bond – in line with environmental, social and corporate governance principles.

It would decide on its outlines by March, the minister said.

Meanwhile, a slow-moving plan to partially privatise loss-making Sonangol faces further delays.

Sonangol is aiming to sell off non-core businesses and, as the crown jewel of a broad privatisation push, list a 30% stake.

While authorities initially aimed to launch the initial public offering before 2022 here, the minister said restructuring along with asset recovery and registration work were not complete.

“The balance sheet of Sonangol should reflect in a very transparent way the assets that they have. Today, it doesn’t,” she said.

Daves de Sousa said pre-IPO due diligence on Sonangol, as well as state diamond miner Endiama and airline TAAG, could begin this year.

“Probably the due diligence will take 12 months, 15 months. If there are still some dots to fix and some issues to solve, probably we are talking about two years,” she said.

Further 62 smaller state assets will be privatised this year, Daves de Sousa said, including a local IPO of Sonangol-owned shares in Banco Angolano de Investimentos (BAI) as well as sales of shares in the Bodiva stock exchange, bank Caixa Angola and ENSA insurance.

Speaking about efforts to claw back state assets lost to corruption, Daves de Sousa said investigators were examining $12 billion worth of assets that could be recovered, with the potential for that figure to rise.

The government accuses the previous administration of siphoning off assets for the personal enrichment of top officials at the nation’s expense. President Joao Lourenco, in power since 2017, launched an anti-corruption crusade that has so far recovered assets worth more than $5 billion.

Angola, which successfully completed its $4.5 billion three-year programme with the International Monetary Fund last year, has no plans for another funded programme, Daves de Sousa said, but will keep a close relationship with the fund.

“The IMF showed to us this door and of course we will be ready to use it if it is needed.”

Read original story on Reuters

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