• The government sold USD 1.75 billion in Eurobonds on 08 October to be used to fulfil funding needs for the year.
• The bonds were significantly oversubscribed, allowing the government to negotiate cheaper interest rates.
• Relatively favourable terms of the Eurobond signal positive market sentiment regarding Angola’s macroeconomic conditions.
• Timing, external market conditions and longer-term reform prospects also skewed risk perception in favour of Angola.
• Political uncertainty and changes in external conditions constitute more significant economic risks than the recent debt acquisition.

On 08 October, the government sold USD 1.75 billion in Eurobonds. The sale was split into two tranches: USD 1 billion maturing in 2030 at a 9.25 percent coupon rate; and USD 750 million maturing in 2035 at a 9.78 percent coupon rate, with Citi Bank, Deutsche Bank, JP Morgan and Standard Charted managing the sale.

Dynamics of the sale were particularly favourable for Angola. The bonds reportedly attracted orders exceeding USD 6 billion, resulting in a 3:4 subscription ratio. Such strong demand for the Angolan securities allowed the country to bargain down the cost of the bonds. Rates for the coupons were reduced from initial guides of 9.75 percent for the 2030 maturity and 10.50 percent for the 2035 maturity to their lower final rates of 9.25 percent and 9.78 percent respectively.

The Eurobond is the first issuance by Angola since 2022. At the time the country also raised USD 1.75 billion in 10-year notes (maturing in 2032). Angola’s return to the international capital markets has been prompted by several considerations. For one, it is part of the government’s so-called 2025 financing plan. This aims to raise USD 6 billion through a variety of financing instruments to meet funding needs of around USD 14.9 billion; these include the budget deficit, debt refinancing and development spending highlighted in the country’s budget.

Foremost among the debt to be repaid is a USD 864 million Eurobond maturing in November and a USD 1 billion total return swap (TRS) with JP Morgan currently expiring in December. However, the government has yet to decide whether it will wholly refinance the TRS, partially repay, or extend the arrangement entirely. Director general of the public debt management unit, Dorivaldo Texeira, indicated in late September that such a decision will be made in November. The most recent indication by Teixeira on 14 October during the “Angola 10 years of Eurobonds” conference pointed to a likely extension of the TRS to avoid concentrating debt payments.

The Signal

Relatively favourable terms of the Eurobond signal positive market sentiment regarding Angola’s macroeconomic conditions. Angola has registered economic growth since 2020, following successive contractions since 2016 caused by falling oil prices, declining output, malgovernance and political instability. Central to the recovery is the low-base effect induced by the five years of contraction and modest non-oil growth. Oil production has been on a sustained downward trend since 2008, when it peaked at 2 million barrels per day (bpd); the latest data by the National Agency for Petroleum Gas and Biofuels indicates that it averaged 1.03 million bpd in August. This is after the daily output decreased to below 1 million bpd in July, the first time it had done so since it withdrew its membership from the Organization of the Petroleum Exporting Countries (OPEC) in 2023. This had prompted the International Monetary Fund (IMF) in September to revise GDP growth for 2025 downwards to 2.1 percent, compared to an initial growth target of 2.4 percent. In contrast, the non-oil sector has averaged between 3 and 5 percent growth consistently over the last two decades according to the IMF. Although accounting for less than 10 percent of exports and less than 40 percent of revenue, it does account for over 60 percent of GDP. As such, it has balanced the contractionary pressures induced by the decline in oil production. Despite the precarious output conditions, Angola has seen considerable consolidation, in part due to an IMF policy anchorage between 2018 and 2021 and sustained reform momentum by the administration of president Joao Lourenco. Since 2018, the country’s budget balance has fluctuated between a deficit of 2.8 percent of GDP and a surplus of 3.4 percent. This is despite the slow reduction of contentious fuel subsidies, which are widely viewed as a fiscal drain. Angola’s debt to GDP ratio has fallen from 119.1 percent in 2020 to a current 62.5 percent projection in 2025. Meanwhile, the current account balance has been in surplus since 2018, currently forecast at 0.9 percent of GDP for 2025. Such demonstrable intent to stabilise macroeconomic conditions irrespective of challenging growth likely resonated well with creditors.

Timing, external market conditions and longer-term reform prospects also skewed risk perception in favour of Angola. There is consensus that, at present, emerging and frontier market sentiment has improved this year, hence the issuance was well timed by Angola. This is reflected by several key indicators. Emerging market yield spreads against United States 10-year treasury bonds have been downward-trending for most of 2025. Spreads for South African 10-year bonds and US equivalents have declined by 1.43 percentage points since April. Furthermore, Morgan Stanley’s MSCI Emerging Markets Index has risen every month since April, reaching a high of 1,373 index points in September. Together, these indicators point to decreased risk perception toward emerging market bonds and stocks and greater demand for both securities. Driving the emerging market rally are surging commodity prices, a weaker United States dollar (USD), geopolitical uncertainty, and asset hedging and diversification. Investors may also have been buoyed by recent growth-positive developments. On 03 September, mineral resources minister Diamantino Pedro Azevedo announced that the country is due to receive around USD 72 billion in investments for oil concessions between 2025 and 2029. While it is unclear how much this will improve oil output, the capital injection will necessarily contribute to growth acceleration. Angola, through diamond parastatal Endiama, has also submitted a bid for a minority stake in the De Beers mining company. Due to non-disclosure clauses, the size of the bid and its cost are unclear. However, there is reason to suggest that Angola is part of a pan-African consortium alongside Botswana, South Africa and Namibia, seeking to purchase Anglo-American’s USD 4.9 billion stake. Should the pan-African bid be accepted, it would give Angola an alternative income stream. Moreover, it could facilitate skills transfer and harmonisation with De Beers that would ultimately benefit the domestic diamond industry. The prospect of expanding Angola’s flagship Lobito Atlantic Railway Corridor project may also have attracted creditors. At its peak, the project is expected to draw significant economic benefits for the Sub-Saharan country, with the United States (US) International Development Finance Corporation being a primary backer of the project.

Political uncertainty and changes in external conditions constitute more significant economic risks than the recent debt acquisition. As noted, the Eurobond has been acquired on fairly favourable terms for Angola. This should ease short-term liquidity pressures, rooted in the country’s significant debt servicing obligations, without compounding longer-term pressures through high coupons. Angola grapples with total debt obligations amounting to 67 percent of revenue this year. As such, the bond extends the country’s financial headroom. Nevertheless, changes in external conditions pose a key economic risk in what remains an undiversified Angolan economy. Foremost among these is growing speculation over an oil glut in 2026. Should this be the case and prices reduce, it could undercut Angola’s earnings, especially given the country’s low production. Should the country opt to extend its TRS with JP Morgan, it may lead to further margin calls. Moreover, it would undermine both fiscal and balance of payments consolidation. A rebound in the USD and renewed risk aversion towards emerging markets may also reverse recent gains by Angola. A resurgent USD would accelerate the depletion of foreign liquidity to maintain the Angolan kwanza’s (AOA) peg (which exists functionally despite being removed as formal policy in 2018). Internally, political uncertainty also poses a risk to Angola’s economic prospects. A concern in this regard is the hosting of local government elections and general elections in 2027. Local elections were first scheduled for 2020 but have been postponed indefinitely by the ruling MPLA party. While there is no legal requirement for when the elections should be held, there is an institutional requirement to hold them before the 2027 general elections if Angola is to fulfil the decentralisation mandate of the 2010 Constitution. In light thereof, the Lourenco administration has pledged to hold the local election by 2027. Nevertheless, uncertainty over the local elections could escalate public grievances and trigger unrest, especially if cost-of-living pressures remain elevated (annual inflation measured 18.16 percent in September). This uncertainty will weigh on market sentiment, and management of the grievances could see the government walk back its reform commitment. Alongside the elections, president Lourenco’s succession could be a trigger for uncertainty. Lourenco is currently serving his second and final constitutionally mandated term. Jostling for influence within the MPLA could distract from core economic imperatives, especially from 2026, when the broad succession process is due to commence. Meanwhile, public grievances could escalate in the event that Lourenco himself leans towards a third term.