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Angola Raises $1.5b In First Eurobond Post Oil-Price Crush Africa 

Angola Raises $1.5b In First Eurobond Post Oil-Price Crush Africa 

Angola raised $1.5 billion in its debut Eurobond and the first African sovereign debt sale in the post oil-price crush environment, a deal that analysts say will set the tone for frontier-market debt offers.

Proceeds from the 10-year issue with a 9.5 percent yield will go towards supporting long term economic development in the oil-dependent Southern African nation, Reuters reported.

“This inaugural issue is an extremely important step for our country and we view this as the beginning of a long-term relationship with the international capital markets,” Finance Minister Armando Manuel said in a statement.

The second largest crude oil producer in Africa after Nigeria has faced teething economic challenges this year after oil prices collapsed on the international market in the last quarter of 2014, squeezing much needed revenue to Angola’s government.

Lack of hard currency has seen the Angolan kwanza depreciate about 35 percent against the US dollar, according to Reuters data.

Angola has now joined a growing pack of recent African sovereign bond issuers that include Kenya, Rwanda, Ethiopia and Ghana.

Of great significance is the investor-appetite test that Angola’s Eurobond has offered other potential issuer from the continent that would like to tap the international debt market in this strong dollar and weaker oil prices environment.

The Angolan Eurobond performed remarkably well considering the country’s credit rating was lowered to four levels below investment grade on Sept. 25 by Fitch Ratings, which cited a dependence on oil as the country faces the prospect of its first current-account deficit since 2009.

Some analysts had indicated reservation on how investors will react to the country’s first ever bond due to the timing considering it had delayed the offer since 2011.

“I would be wary when it comes to picking up Angola dollar debt. At the moment there is so much turbulence in the market as a result of falling oil prices I would be tempted to stay away from this issue,” one London-based fixed income trader told Euromoney in February.