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

Band Karin Strohecker, Joe Bavier and Tommy Wilkes

LONDON, January 24 (Reuters)Angola will return to international capital markets this year to sell Eurobonds, Finance Minister Vera Daves de Sousa said on Monday, while the partial privatization of state oil company 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 soar to around 30% during the COVID-19 market rout in March 2020. It suffered a series of downgrades that dropped its sovereign rating to the “substantial risk” category.

As borrowing costs have fallen, the government is seeking to cover part of its external financing needs of $4 billion through the sale of bonds.

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

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

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

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

It will decide its outline by March, the minister said.


Meanwhile, a slow-moving plan to partially privatize loss-making Sonangol is facing further delays.

Sonangol aims to sell non-essential businesses and, as the crown jewel of a massive privatization drive, lists a 30% stake.

While authorities initially aimed to launch the IPO before 2022, the minister said restructuring as well as asset recovery and registration work were not complete.

“Sonangol’s balance sheet should very transparently reflect the assets it has. Today that is not the case,” 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.

“The due diligence will probably take 12 months, 15 months. If there are still things to fix and issues to fix, we’re probably talking two years,” she said.

Another 62 smaller public assets will be privatized this year, Daves de Sousa said, including a local IPO of shares held by Sonangol in Banco Angolano de Investimentos (BAI) as well as share sales on the Bodiva stock exchange, Caixa Angola bank and ENSA. Assurance.

Speaking about efforts to recover state assets lost to corruption, Daves de Sousa said investigators are looking at $12 billion in assets that could be recovered, with that figure potentially growing.

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

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

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

(Reporting by Karin Strohecker, Joe Bavier and Tommy Wilkes Editing by Tomasz Janowski)

((karin.strohecker@thomsonreuters.com; +442075427262; Reuters Messaging: karin.strohecker.reuters.com@reuters.net))

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