International Reserves fell to USD 13.5 mn by October, their lowest level in 11 years.

Authorities restated their plan of not building up the country’s external buffers, claiming that the current FX reserves are enough to cover short-term pressures.

Traditional metrics such as import coverage and short-term debt portray the stock as adequate.

However, the Assessing Reserve Adequacy (ARA) metric developed by the International Monetary Fund (IMF) raises concerns about the country’s external vulnerability.  

BUY: High coupons provide an attractive carry for a bond that will remain externally resilient ...

The commodity boom has helped to significantly improve Angola’s debt metrics.

With the presidential elections now on the rear mirror, the major risks to the credit arise from the country’s dependency on volatile international oil prices.

Even if international markets remain closed, there are no Eurobonds coming due in the short term that would require refinancing.

In this report we show that Angola is likely to remain resilient even in a bear market scenario for oil, which motivates us to modify our rating from HOLD to BUY.

The oil price rally has boosted the external account surplus and the GDP outlook.

We forecast an 11.7% of GDP current account surplus and a 3.2% GDP expansion for 2022.  

The crude oil production has remained stagnated, averaging 1.17 mn barrels a day until September, 4.1% YoY higher, but below its pre-pandemic levels.

We believe that the positive outlook is almost entirely attributable to the bullish oil market, and the excessive reliance on an ailing industry leaves the country highly vulnerable to a negative external shock.    

HOLD: Although we like the country’s fundamentals, we await ...

Incumbent President João Lourenço was reelected for a second term, in what will likely be his last one due to the two-term presidential limit set in the Constitution.

The election results will extend the 47 years of MPLA party rule over the country for at least five more years.

However, the main opposition party, UNITA, secured 90 seats out of 220 in the National Assembly, leaving the MPLA without a legislative supermajority.

The turnout was the lowest in history with just 44.8% citizens casting their votes.

HOLD: Despite past outperformance fueled by the oil rally, the risk of a global recession and t...

Soaring oil revenues are improving Angola’s economic outlook.

We believe higher oil exports will increase the current account surplus to 11.4% of GDP. We also expect an exchange rate appreciation of 31.1% for 2022.

A slight increase in oil output mixed with the income effect created by the soaring external revenues will boost real GDP growth to 4.7% according to our estimates.

Presidential elections are less than a month away, and João Lourenço is still perceived as the favorite to secure a second term.

HOLD: Despite improving fiscal and external accounts, the yield curve remains flat above 12%. ...

Oil exports soared to USD 12,031 mn in Q1-2022, thanks to the bullish international oil market.

The current account recorded a surplus of 3.4% of GDP (USD 4,715 mn), its highest mark over the last decade.

The positive result in the current account boosted the Kwanza, which currently sits among the top emerging market currencies with a 23.1% YTD appreciation against the US dollar.

However, divestments in the oil industry and amortization payments on the Chinese loans almost completely offset the gains from the trade balance.

HOLD: Despite rising exports and overall fiscal surpluses, we remain cautious due to the coun...

After its exit from the country 10 years ago, mining giant De Beer will return to Angola through two new joint ventures with Angolan state company Endiama.

The company declared that Angola is one of the most attractive countries globally for the diamond industry.

According to the Angolan oil and resources minister, 60% of the basins are still unexplored.

Angola is one of the few diamond mining countries reporting an increase in its production.

Official estimations suggest that export inflows of rough diamonds will be around USD 1.3-1.5 bn, or 1% of the GDP in 2021, but with the potential to increase to at least 2% o...

Although it remains far from pre-pandemic levels, the recession is over after five years, after the Angolan economy grew by 0.7% in 2021.

Gains are conditioned by the continuous drop of oil activity, which contracted by 11.5%, the sixth year in a row.

Compared to other African OPEC+ members, Nigeria and Algeria, Angola lags regarding economic recovery, while only Algeria reported an increase in its oil output.

We adjusted our estimation for Angola’s GDP from 2.7% to 3.2% considering the high oil prices that should cause an income effect.

The persistent decline in the sector will keep bringing down the entire e...

Books have reached USD 4 bn in subscriptions.

The proceeds were used to repurchase USD 636 mn of ANGOL 9.5% 2025

Despite sky-high oil prices, at 8.75%, the issuance yield is worrying.

Angola is enjoying a strong momentum because of higher oil prices, nevertheless, the revenues are limited as they also have to increase its quota to pay oil-backed loans, especially to China.

About two-fifths of Angola’s external debt is composed of these types of loans.

Despite the lack of transparency, it is known that over 60% of the total Angolan oil output is exported to China.

Currently, Angola sends up to 12 out of 35 cargoes to Unipec and Sinochem.

Authorities aim to accelerate the decrease the USD 20 bn in debt stock to Chinese creditors.

HOLD: Despite prices that are close to par, the attractiv...

With elections around the corner, President Lourenço has backtracked on his promises of a democratic transition.

The government has pledged to centralize the vote-counting process, raising concerns about lack of transparency going into the August 2022 general election.

Despite his initial plans to “build a vibrant and solid democracy”, the 2021 constitutional amendment, while positive, lacked ambition.

We do not think that Angola’s economic underperformance and the opposition’s best efforts will be enough to prevent Lourenço from being reelected.

HOLD: Despite strong oil prices ...

General elections will likely take place in August. We expect incumbent João Lourenço to be reelected, with the potential for protests if the process is not seen as free and fair.

The fiscal position of the country will improve, as the current rally of oil prices will produce a fiscal surplus of 0.8% and a primary surplus of 6.0% of the GDP.

Considering the recent decrease in country risk and the upgrade in credit rating by Fitch, we think an Eurobond issuance could happen this year.

The good performance of the oil industry will push GDP growth to 2.2% this year, while inflation will decelerate to 23.1% than...

Oil producing countries have basked in the international rally this year, but Angola has been an exception.

Oil revenues are below 2019 levels despite higher export prices, explained by the decrease in oil output that started a decade ago and has continued this year.

Angola is having a hard time following the OPEC+ rhythm, which aims to increase supply by 400 tbd each month.

Authorities are betting on more crude licensing rounds to offset the natural decline of mature fields, but they would need to add 600 tbd just to reach 2011 output levels.

SELL: With alarming solvency and liquidity ratios, plus a deteriorating o...

We review the main 2022 electoral events among the countries we cover, describing the big picture of Costa Rican, Lebanese, and Angolan elections.

The race for the Costa Rican presidency remains wide-open after former president José María Figueres lost most of his tenuous lead due to corruption scandals related to his party (PLN, center-left).

Lebanese Parliamentary elections will be held on March 27, 2022, six weeks ahead of schedule due to the recent amendments to the electoral law, which also allows Lebanese expatriates to vote for all 128 MPs instead of just six.

According to the polls, the Angolan oppos...

The 2022 Budget estimates a close-to-zero surplus of 0.003% of the GDP, but a primary surplus of 5.5% of the GDP.

However, we believe that some of the macro assumptions are overly optimistic, especially regarding inflation and oil production while economic growth forecast is cautious.

We calculate there will be a deficit of 1.5% and a primary surplus of 4.7% in 2022.

The biggest challenge for the country will be covering its financing needs of 10.7% of GDP, which will likely translate into more domestic and external debt.

SELL: We don’t think Angola’s significant dependance on external liquidity and a po...

On October 5, the three main opposition parties formed a coalition and named a candidate to face president Lourenço in the 2022 elections.

However, the Constitutional Court blocked their candidate from running for president.

This could be the first of many moves from the historically authoritarian ruling party to guarantee that Lourenço will be reelected.

Despite his promises, in August, Lourenço himself enacted a law that failed to reduce executive power.

SELL: bad debt ratios and bad growth prospects, plus bond prices above USD 100 cents on the dollar concludes within a negative risk reward me...

Angola’s real GDP YoY fell -3.4% in Q1-2021.

The economy has been mired in recession since 2016, and authorities hope the country will start growing again by the end of 2021.

The annual inflation rate rose to 25.3% in June-2021, and unemployment stood at 30.5% in Q1-2021, deepening the stagflation.

Angola has asked for an extension under the G20 DSSI to suspend its bilateral debt service from July 1 to December 31.

The government is confident that there is no need for negotiations to restructure debt owed to other creditors.

This is despite financing needs estimated at 13.4% of the GDP and a debt-to-GDP ratio of 123%.

In the short term, Angola will rely on domestic financing and the boom in oil prices to buy some time while economic reforms slowly progress.

Nevertheless, the country faces important threats in the near future, such as the natural decline in oil fields and the lack of a plan to secure its paymen...

After more than a year of expansionary monetary policy and low rates, doubts arise as to whether Africa's central banks will be able to maintain it

Amid concerns about the reactivation of the economies, inflationary pressures arise that put pressure on the monetary authorities

Central banks, which tend to act collectively, maintain a policy of greater tolerance to inflation to stimulate economic growth

Recent developments have triggered uncertainty about the future path of oil prices, which influenced every economic figure for Angola in the past.

We remain confident that Angola will report better fiscal figures with respect to official estimations; however, we remain in the dark because of a notable delay in publishing 2021 numbers.

Likewise, Angola’s gains from high oil prices are limited because of the weakness the domestic oil sector.

Additionally, there are reports that signal a slow recovery of the non-oil economy because of the pandemic lasting effects.

We focus on the largest African commodity exporters within the EMFI universe, which would benefit from the current price boom.

The benefits of a bull commodity cycle will enhance liquidity buffers and help improve fiscal accounts, but getting countries back on a debt sustainability path takes more than that.

The emerging countries that benefit must take advantage of the tailwinds to undertake structural changes that can improve long-term solvency.

The current account surplus was 1.5% of the GDP in 2020, a y-o-y decrease of 83%.

The main reason behind the fall was the plunge in oil prices, caused by the collapse in demand due to the pandemic.

Angola is now benefiting from the recovery in oil prices. Its FX rate has stabilized, creating some space for a loosening monetary policy after 2 years of unchanged rates.

The country is in a very fragile position, with downside risks related to a new global wave of COVID cases that could push oil demand (and prices) down.

SELL: Short-term improvement in the credit should not be interpreted as resolving sustainability con...

Kristalina Georgieva will present a formal proposal for the new SDR allocation to the IMF Executive Board in June.

The global allocation would amount to USD 650 bn, while the amount received by each country would be determined by its quota.

Angola has the fifth largest quota in Africa (0.16%). It would imply an allocation of USD 1.04 bn, equivalent to 1.5% of the GDP or 12.4% of liquid FX reserves.

Although any amount is welcome, we think this would only bring temporary relief given that long-term economic challenges remain.

SELL: The slowdown in the rally of oil prices is not good news, and (while positive) not eve...

Commodity prices have performed spectacularly after the chaos of March 2020: Precious metals (+ 25%), Gas (+ 66%), Oil (+ 254%), Copper (+ 93%) and Coal (+ 74%)

Some short-term conditions such as the stimulus packages of the main economies, inflationary risks and the weakness of the dollar promote a rise in real assets

Increased industrialization in India and the maintenance of government spending at high levels, support the boom in the long term

For now we know that there is a rise in prices, but there is no certainty that there will be a supercycle of several years because all the long-term factors are variable

Of...

Oil production has fallen by almost 500 thousand barrels per day (tbd) in the past 4 years.

Angola’s upstream regulator, ANPG, expects that production will recover to around 1,300 tbd, from 1,154 tbd in January 2021.

It also estimates that natural decline at aging oil field will leave output below 1,200 tbd by 2023, under 1,000 tbd by 2025 and barely above 500 tbd by the end of the decade.

In 2020, the country struggled to comply with its OPEC+ output quota while servicing its debt to China, resulting in notable shipment cuts to the rest of its commercial partners.

SELL: Despite the short-term impact of higher...

After the triple shock of 2020, the government has tried to address the crisis without breaching the commitment to fiscal consolidation assumed with the IMF

Although total debt is excessively high (122% debt-to-GDP), the debt relief achieved with China reduced the most urgent liquidity problems

An increase in the IMF's allocated SDRs also gives hope to the sovereign

We believe that Angola's curve continues to move away from its deteriorating fundamentals, which is why we maintain our SELL credit rating

We think that it is unlikely that this year will take place local government elections either.

Opposition parties are looking for alliances as the 2022 presidential elections are getting closer.

We estimate that the fiscal deficit will decrease from 5.4% of the GDP in 2020 to 3.8% in 2021, while the primary surplus would increase from 0.5% to 1.4%, respectively.

We believe that there will be a GDP growth of 1.7%, but inflation would accelerate to 26.1%.

SELL: Although rallying oil prices can have a positive effect on Angola’s current account balance and economic activity, overall Angolan macroeconomic pic...

Emerging markets faced massive capital flight as a result of the COVID-19 crisis.

However, there has been debate as to whether the severe initial shock was primarily the result of an interruption in liquidity flows and not the deterioration of macroeconomic variables.

Growth in emerging economies may have taken a permanent hit but, at the same time, emerging markets could become more attractive to those hunting for yield.

We believe that the deepness of the impact of the pandemic on EMs can be quantified.

While inflation and unemployment keep climbing up, the central bank has kept the interest rate unchanged at 15.50% since 2019.

The Monetary Policy Committee has mixed opinions about how to proceed: stimulate the economy or tackle inflation?

Likewise, the kwanza has depreciated 26% YTD, adding pressure to inflation.

There have been several protests over the year, because of the deteriorated living conditions and the constant delay in local elections.

SELL: Fundamentals remain very negative, and higher oil prices are not enough to compensate for the high probability of political tension stemming from protests.

We take a comprehensive look at political risk indicators in a group of Emerging Market countries, trying to identify potential sources of conflict.

We analyze the electoral scenarios in the four Latin American nations that will have electoral processes during the end of 2020 and all of 2021.

We review the scenarios in the parliamentarians of Argentina and El Salvador, we comment on the electoral process that will take place in Venezuela, and we review the perspectives of the presidential elections in Ecuador.

We evaluated the World Bank’s governance indicators for our sample countries in 2019 and share our view of thes...

The 2021 budget acknowledges the difficulties that Angola still needs to overcome.

Authorities expect no GDP growth in 2021, while oil production would decrease by 4%.

For 2020, we estimate that the fiscal deficit will be equivalent to 5.6% of GDP, with gross financing needs of 20.1%.

The government calculates that in 2021 the fiscal deficit will decrease, standing at 4.1% as some reforms take place.

SELL: Even though fundamentals remain very negative, higher oil prices and hopes for a deal with China being realized soon keep driving prices – and downside risks – up.

Angola is vulnerable to oil price volatility given that 95% of total exports are oil-related.

After oil prices suffered a notable decrease in April, hard currency inflow losses amounted to USD 7.7 bn (11% of GDP) over the first two quarters of the year.

The current account went from a surplus of USD 1.8 bn in the 1Q19 to a deficit of USD 1.2 bn in the 2Q2020,

Per our estimates, gross external financing needs will amount to USD 6.6 bn, 9% of GDP.

The scenario would have been worst, were it not for the proactive role of the government by seeking debt relief.

SELL: Angola is very likely to require ...

The COVID19 crisis could open the door to new sovereign restructurings

In the last decade, sovereign default events carried out for political reasons have increased by 50%

Suriname and Ecuador, with previous complications, this year saw their position even more deteriorated due to the COVID19 crisis and announced restructuring

On the horizon El Salvador, Angola and Sri Lanka are the countries that generate the most concern of those followed by EMFI

The very probably extension of the Debt Service Suspension Initiative (DSSI) at next month's G20 meeting could lead to increased pressure for private participation.

A global approach to the DSSI that involves involuntary exchanges would turn participation into an event of distressed debt exchange.

Any material change in contract terms that implies NPV losses is considered as a default by rating agencies.

Among the list of possible beneficiaries of the DSSI, there are 21 countries at high risk of facing external debt problems and another 4 in already in distress.

Isabel Dos Santos, daughter of former president José Eduardo Dos Santos, looted billions of public resources through a complex business scheme.

There were more than 400 companies and subsidiaries in 41 countries, registered in low tax and opaque offshore jurisdictions.

Most of the companies were involved in government contracting or required government authorization, which was provided by president Dos Santos.

According to our estimations, the Angolan government could recover USD 2.2 bn, equivalent to 3.2% of GDP from these past operations.

Pressure grows on China, as one of the world's main creditors, to enter the DSSI without restrictions

The terms of China's agreements with emerging or frontier nations are extremely aggressive compared to members of the Paris Club

One issue to keep an eye on is the participation of Chinese state banks in the renegotiations, as these entities hold about 75% of the country's total debt

Chinese authorities have spoken with 20 countries about the DSSI, and it has approved relief for an amount close to USD 3 bn for 10 countries

Angola and Zambia are the countries that most urgently need to address a restructu...

The push to force private sector participation in the G20 Debt Service Suspension Initiative (DSSI) has mostly receded by now.

Rating agencies have recently made explicit that they won’t consider DSSI participation, in itself, as negative for credit ratings.

Recent academic studies show that restructuring debt owed to private creditors has a material long-term adverse effect, but a similar treatment of official debt doesn’t.

Some analysts believe that merely qualifying for the DSSI may have a material adverse effect over credit spreads.

If this is so, and DSSI participation does not lead to private secto...

Last month, the statistical institute reported that GDP fell by 1.8% in the 1Q2020. In broad terms, the non-oil economy reported negative results.

The unemployment rate went from 28.7% in the 2Q2019 to 32.7% in 2Q2020 and without wider economic support programs, the number will likely continue to increase.

Another effect of the global pandemic has been a relative risk aversion that, together with the fall in oil prices, has put pressure in the local currency.

Consequently, the exchange rate has depreciated 18% YTD.

69% of the country’s debt is vulnerable to FX risk, so if the depreciation continues, debt-to-GD...

Despite pretty bad fundamentals, the price of our reference bond, the ANGOL 8 2029, has surged dramatically.

We see four major risk factors that are taking a heavy toll over the market’s perception of Angolan risk, beginning with the large external financing needs.

Also, we see four factors that could play a large role (positive or negative) on momentum going forward, led by the upcoming IMF decisions and the renegotiation of Chinese debt.

Even if we see some room for upside over the upcoming months, we remain sellers of Angola due to our perception of an adverse risk-return balance.

Almost four months after the first case of COVID-19 in the country, and three months after oil prices plummeted, Angola can say habemus a revised 2020 Budget.

The budget contemplates a GDP contraction of 3.6%, an optimistic print compared to our estimation: -4.8%.

The budget deficit is estimated at 4.5% of GDP and the primary surplus at 2.0%.

The gross financing needs remain the same at 22.3% of GDP, equivalent to about USD 14 bn.

So far Angola appears to be trying to muddle-through the 2020 external shock, and there are no stated intentions to engage in a restructuring of bonds at this point.

Nonetheless, the...

Since the onset of the COVID-19 pandemic, several of our EMFI countries have suffered massive repricings all along their sovereign curves.

Recovery has not been homogeneous, and some countries still exhibit inverted yield curves, a traditional indicator of liquidity strains.

We decided to take a closer look at Angola, Sri Lanka and El Salvador, focusing on liquidity and solvency indicators, in order to determine if these inversions present an investment opportunity or in fact are accurately priced.

We like El Salvador's and Angola's front end of the curve, but we stay wary and have a negative outlook on Sri Lanka....

36 of the 77 eligible countries have applied for the G20’s Debt Service Suspension Initiative (DSSI).

Chinese debt has grown significantly, but has remained highly opaque. The recently released World Bank dataset is a big step forward in this regard.

Countries that would benefit the most from DSSI owe on average 42% of their 2020-2021 and 41.1% of their 2022-2025 debt service to China.

So far, DSSI only extends for payments scheduled for 2020, but there are many voices calling for an extension to 2021.

To put it bluntly, a program of debt relief or a generalized standstill on official debt would go nowhere wit...

Oil production stayed stable around 1,400 tbd until March 2020, despite OPEC insisted on Angola to cut its production to around 1,100 tbd.

In May, Angola reported production of 1,251 tbd, the lowest level of the last 10 years.

Angolan active rigs went from 7 in April to 0 in May. After the French oil company, Total, announced a standstill in drilling operations.

Angola still has the “fortune” that oil prices cover the cost of production per barrel, which is currently at 7.53 USD/bl.

The country was struggling to comply with its oil payments to China, which accounts for 67% of total oil exports.

Low interest rates and the hunt for yields of the last decade has left broad swaths of EMs overindebted and vulnerable.

The first half of 2020 is not yet over and we already have 3 countries in default.

The recent record of most defaults on Eurobonds on a single year was 4 in 2017, so 2020 is not far from setting new records.

Eurobond restructuring processes are usually among the most complicated due to the variety of holders and the different interests they represent.

Suriname, Zambia, Belize, Sri Lanka and Angola are in the most risk to engross the default-statistic for the year.

May was one of those months that feels like a year. We had a default in Argentina, a tense election in Suriname, a deadly pandemic still spreading around the world, and yet, it was a good month for emerging market debt

Our EMFI Core Index went up for the first time in 6 months. The biggest winners were Argentina, Angola and Ecuador, while Venezuela, Suriname and Sri Lanka were among the negative outliers that went against the general risk-on mood

The macro and fiscal situations deteriorated further for all countries covered, and we chronicled the dramatic economic crash in our Country Reports

We’ve been preparing fo...

Total domestic debt stock amounted to USD 22.9 bn, and external debt stock stood at USD 50.1 bn in 4Q 2019. Total public debt stock reached USD 73 bn, 86.2% of GDP

The authorities will likely tap the Eurobonds’ market in the next weeks, thanks to more favorable conditions due to the rebound in oil prices.

While China is the main external creditor, commercial banks rule in the domestic market. Angola would like to restructure its the Chinese debt, however, rumor has it that China is upset with Angola for approaching the U.S.

Pending payments for this year amount to USD 4.8 bn in domestic bonds.

An agreement wit...

As of May 22, 8 countries have at least one USD-denominated sovereign bond trading below 50 cents on the dollar.

The Covid-19 crisis could lead to a new wave of sovereign defaults from prolonged confinements.

We discuss the worst debt restructuring events so far this century.

Argentina 2005 remains at the forefront of these events if we exclude the exceptional cases of countries at war or leaving them.

The countries with the most compromised solvencies that could generate problems with their debt are Angola and somewhat behind, Sri Lanka, El Salvador, Egypt and Pakistan.

A pandemic year was on the cards, the dramatic magnitude of its effects was not.

The global economy is expected to shrink by 3% in 2020, but leading indicators are pointing to a deeper downturn.

Emerging countries with a history of volatile economic growth will show the worst results.

Some economies may experience a period of above-trend growth during the recovery, although the level of GDP will remain, in most cases, below the pre-virus level.

Pakistan is the weakest among the EMFI Countries, in terms of the spread of the virus. Lebanon, Sri Lanka and Barbados are the strongest, with a controlled increase rate and a persistent lockdown.

The countries that we evaluate with the worst economic performance year-to-date are Angola, Venezuela, Lebanon, Barbados, El Salvador, Ecuador, Sri Lanka, Argentina and Suriname.

Since the end of 2019, the local currency has depreciated -70.5% in Venezuela, -52.4% in Lebanon, -43.5% in Argentina and -40% in Suriname.

El Salvador and Argentina launched the most ambitious fiscal program among our sample, which will cost 6% and 5.6...

The safest rung of EM hard-currency sovereign bonds fell on March but has already retraced all their losses.

Mid-quality EMs plunged over March and have risen somehow since, but haven’t fully recovered.

This segment has seen a 320 bps rise in average yield in 2020, going from an average 6.1% yield to 9.3%.

We believe high-yield bonds in our mid-quality group have significant upside if they avert a credit event.

After a dry March, markets are again open for fresh bonds, but only from relatively high-quality issuers.

US stocks rose 12.7% in April, while US investment grade bonds rose 4.6% and EM bonds 4.0%.

Our EMFI Core Index fell 0.9% over the month and is 27.1% down YTD.

The best performers of April were Egypt (+4.7%), Sri Lanka (+4.0%) and Turkey (+3.8%).

The worst performers were Suriname (-26.9%), Lebanon (-14.0%) and El Salvador (-11.3%).

The IMF has approved just over USD 16.0 bn for 61 countries.

Of the 16 countries we follow, 6 have already been granted financing for a combined USD 3.5 bn.

Lebanon and Argentina presented restructuring proposals asking for large debt relief but not offering much adjustment.<...

We identified 23 countries that have at least one bond yielding above 10%, a threshold usually associated with sovereign distress.

Among the most distressed credits, first-time defaulter Lebanon is trading between 16.3 and 18.3 cents on the dollar, on account of slow progress on a reform plan.

Argentina’s debt goes in a range of 23.2 to 34.6 cents on the dollar, days after the Fernández administration’s aggressive mid-April proposal to bondholders was publicly rejected by 3 creditor groups.

Ecuador trades between 28.8 and 33.6, after negotiating a coupon standstill that will give the country until Augus...

So far, the authorities have not declared much about what measures we should expect so they can make ends meet.

Until now, authorities plans to accelerate a plan to sell state assets and suspend the payment of arrears. They also are reviewing the 2020 Budget, given they initially estimated an oil price of 55 USD/bl.

On April 15th, President Joao Lourenço subscribed a document stressing the urgent need to approve the debt moratorium for all the pending payments of bilateral and multilateral debt.

6% of the total public debt corresponds to multilateral and 10% from bilateral (USD 10.5 bn), where China is the main cre...

On April 15, the G20 agreed on a standstill for bilateral debt service during 2020. Nonetheless, the agreement only applies to IDA-eligible countries. The suspension will be NPV-neutral and will involve repayment over 4 years, including a 1-year grace period.

Multilaterals haven’t found a way to implement a similar standstill. In fact, Fitch Ratings warned them that joining in on the G20 standstill could result in rating downgrades if not appropriately compensated by shareholder countries.

On aggregate, official creditors account for almost 90% of the debt of low-income, and 60% of that of lower middle-income countries, b...

Two weeks ago, we singled out some early calls for a generalized global debt moratorium in our Global Strategy Viewpoint: Force Majeure. The idea has gained significant traction and is becoming one of the main themes in economic and financial discussion.

While we don’t think a generalized moratorium on commercial bonded debt is likely to succeed, investors should be aware that it is a growing theme and bondholders will probably be under increased pressure to accept attempts at restructuring bond terms.

There are some indications that China is a significant roadblock for the IMF-World Bank initiative for a bilateral debt m...

The COVID-19 crisis is raising a difficult question of public policy for emerging market economies with low fiscal space, which have to reconcile economic and social policy with debt service.

The relation between liquidity and solvency problems is not straight-forward: the COVID-19 shock, which presents liquidity challenges first and foremost, can unearth underlying solvency problems and can also turn liquidity problems into solvency ones if improperly managed.

We’re already seeing some early calls for an international debt holiday to exempt countries from paying during the COVID-19 crisis. Multilateral organizations are ...

In December 2019, Brent was trading at 67.5 USD/bl, 2020 Budget estimated at 55.0 USD/bl and is currently trading at 24.7 USD/bl, the lowest level since 2003.

For that reason, the minister of finance, Vera Daves, announced today that the budget will be revised and the final version will be submitted at the Parliament before May 15th

The new projection of oil price will be below 35 USD/bl and they estimate an oil production of 3,726 tbd.

Daves also said that they have a forecast of an economic contraction of 1.21% in 2020.

On the other hand, yesterday Standard & Poor’s downgraded Angola’s long-term fo...