According to the information sent to investors, the Government intends to advance the payment of up to 750 million dollars of the total debt of 1.5 billion dollars, which matures in 2025 and bears an interest of 9.5 percent, and issuance of 1.75 billion dollars, which matures in 2028 and has an annual coupon of 8.25 percent.
"The Republic is offering a cash buyback of up to the announced maximum [750 million dollars] and subject to the conditions set out in the memorandum, of the 2025 and 2028 bonds", reads the technical information sent to creditors.
With this initiative, Angola manages to save the payment of the agreed interest, close to 10 percent, and uses the amount it will issue next week, predictably with a lower interest rate, to pay off the debt it had issued.
Furthermore, the authorities may also wish to prevent investors from becoming too exposed to Angolan debt, as some who already have sovereign bonds might not be able to buy more debt, so as not to be over-exposed to a debt considered of risk, but by selling the current debt, they gain liquidity and availability to buy more, albeit at an interest rate that is probably lower than the current one.
On Tuesday, Deutsche Bank and Citigroup, mandated by the Government, will meet with investors, and then for Wednesday the issuance of up to 3 billion dollars in sovereign debt is planned, according to a presidential order published on Wednesday.
"The Strategy for Active Management of the Eurobonds Portfolio is approved, and in particular the Memorandum on the Takeover Offer regarding the early redemption of some of the remaining Eurobonds issued by the Republic of Angola, and depending on the level of demand, the issuance of new series of Eurobonds up to 3 billion dollars", reads the Diário da República of 30 March.
"The revenue from the issuance of Eurobonds is intended to finance the Memorandum, in the event of a surplus to finance the General State Budget", the official Angola bulletin added.
