Angola Bond Demand Shows Africa Can Lure Capital, Goldman Says

  • Demand for debt was more than four times the $1.5bn raised
  • Investors not deterred by headwinds facing continent

Angola’s Eurobond sale earlier this month was more than four times subscribed even though the country is being squeezed by lower oil revenues, showing African nations are able to attract capital, according to Goldman Sachs Group Inc., which organized the offering.

The African nation sold $1.5 billion of 10-year bonds with a coupon of 9.5 percent Nov. 5 in its first international debt offering since 2012. The sale came as the government is cutting spending after Brent crude prices fell 41 percent in the previous year. Angola gets about two-thirds of its revenue from oil.

“We had $7 billion demand for a $1.5 billion bond issue, at a time when they’ve just cut their budget from an $80 forecast oil price to $40,” Colin Coleman, managing director of Goldman Sachs in sub-Saharan Africa, said Tuesday at the Bloomberg Business Media Innovators conference in Johannesburg. “It tells a volume about, notwithstanding all the global risks, where we’re standing in sub-Saharan Africa.”

The demand prompted Goldman to reduce the coupon from 10 percent, and shows that international investors are still willing to pledge capital to African countries and businesses even as lower commodity prices are slowing growth, Coleman said. Economic expansion in sub-Saharan Africa outpaced the U.S. in the past decade and the continent has more favorable demographics than other emerging markets, data compiled by Bloomberg show.

“If you take Angola as an example, it’s not unlike China 30 years ago,” Coleman said. “China 30 years ago didn’t really have equity capital markets, it didn’t have debt capital markets. If Africa can evolve in a sure, steady way that’s going to evolve going forward and keeping the indigenous reforms happening, which in some places are under threat, we should see the capital markets grow.”

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