Angolan President Joao Lourenco © AMPE ROGERIO/EPA-EFE/ShutterstockYou are one lender, among a group of lenders, who, at some point in time, extended a distributed loan of strange purpose and mysterious quantum to the oil-rich but now quite burst African nation of Angola. At some point after on, you and all the other creditors ended up subject to international sanctions — ouch! — and the payment imploded in some way. At some point just, you accused Angola of a royal definition over the tragedy, in an adjudication filed. . . there, but not in public records at the World Bank or UN. Who are you? We know you’re out there, because Angola recently used a proposal for the release of nearly$ 2bn in ties to bury the rather unfortunate information that someone has accused the state of definition. Another defaultsAngola is a party to an mediation in relation to a syndicated service entered into with certain lenders. The service was performed in accordance with its conditions until each of the borrowers became subject to international sanctions, the result of which was to limit the parties ’ ability to perform the service in accordance with its words. One supplier has just commenced arbitration trials claiming that an occasion of definition has occurred and that it is entitled to full payment of its portion of the loan. There is no evidence that that borrower has the required bulk merchant acceptance of 66 2/3rds and therefore, any desire or actions taken by that lender in its own name contravenes the terms of the loan documentation. As like, Angola denies that the borrower is entitled to promote the product or do the state and intends to protect the mediation. This is probably the second case of punishment causing a sovereign default by a second, unsanctioned state. It matters. Even if Angola denies that this product can be accelerated, there is the threat of cross-acceleration in another Angolan obligations, and investors, credit rating agencies, and others really know the details. It also matters because Angola is broke. More than a quarter of state revenues went to servicing debt last year, Fitch estimates. So broke is Angola that these bonds were actually issued as collateral for a$ 1bn loan from JPMorgan. By transferring the bonds, which were issued with a yield of about 11 per cent, Angola won’t have to count them as part of its external debt. The country ’s last proper eurobond sale was in 2022. Which all makes it a shame that the above disclosure is a parody of what debt transparency should look like. We’re told only just enough to indicate an iceberg of sovereign debt oddity lies just below the surface. It sticks out all the more because the prospectus otherwise does list and name many of Angola’s lenders, from Chinese policy banks to western institutions. We are to know Angola has a holdout creditor. But not their name, how much they want, nor where they have brought legal action. We do not know why the lender came under sanctions ( nor whose sanctions ), nor whether they are for example an official creditor, with state backing. We also do not know if this might be the administrator or liquidator of a sanctioned entity attempting to recover assets. It is n’t even spelt out if Angola stopped paying the sanctions-hit loan — we just get some circumlocution about restrictions on “the parties ’ ability to perform the facility in accordance with its terms ”— although it seems likely that this is what triggered the claim. We contacted Vera Daves, Angola’s finance minister, for comment, but she did n’t respond. We do have some guesses. There aren’t many countries that are targeted by so many sanctions that whole groups of lenders can be affected, and that also have investment ties with Angola. But it ’s proving very hard to pin down. And given this is an information black hole in the middle of a prospectus for bonds listed on the London market, this seems suboptimal. Serious financial names are attached to this Angolan bond prospectus. Deutsche Bank was arranger and with Citigroup, a dealer. The bonds, as mentioned, will be security for a JPMorgan loan. We understand Norton Rose Fulbright gave legal advice to Angola on the bond issue, but the firm declined to comment on this role on the record. Almost a decade ago, Mozambique revealed the hidden debts at the heart of the country ’s$ 2bn ‘tuna bond’ saga. This led to some wringing of hands about how easily the institutions of global finance accepted opacity, lack of disclosure, and ultimately corruption risks in one of the world’s poorest nations. We don’t learn.
Does Angola’s secret debts holdout please stand up?
