Angola opens domestic bond market to foreign investors, in talks with JPMorgan

Angola is preparing to open its domestic government bond market to foreign investors as part of a broader strategy to diversify its funding sources and deepen local capital markets. Finance Minister Vera Daves de Sousa confirmed the move, which would allow international participation in the country's $18.6 billion local debt market.

Currently, foreign investors face significant hurdles when attempting to purchase Angolan government securities. Central bank approval and local banking arrangements are required, which limits broader participation by international portfolio investors.

The government is also in discussions with JPMorgan regarding potential inclusion in a new frontier-market local-currency debt index. The index, which is expected to feature countries like Nigeria and Kenya, reflects growing investor interest in an asset class that has traditionally been difficult to access.

Authorities plan to meet with international investors in Luanda later this month to gauge demand and develop a framework for broader market access. "We want to see if we can gain scale, but for that to happen we need to have a clear channel," Daves de Sousa said.

For emerging market governments, foreign participation helps deepen domestic bond markets, broaden the investor base, reduce dependence on dollar borrowing, and potentially lower funding costs. Angola's domestic debt stands at 17 trillion kwanzas, significantly less than comparable economies like Kenya, which has nearly three times more outstanding domestic government debt.

Looking ahead, the government may sell more bonds internationally next year and is considering issuing in currencies other than the U.S. dollar, including the Chinese yuan. Angola's debt-to-GDP ratio, including state-owned enterprise debt, is projected to fall to 48% by end-2027 from 54% at end-Q2.

The government is also exploring a debt-for-nutrition swap with UNICEF, though discussions remain at an early stage. On fuel prices, the focus is on ensuring supply and expanding cash-transfer programmes rather than raising prices again, with fuel subsidies unlikely to be eliminated within the next year.