HomeBusiness DigestAngola government arranging US$3,5b bank credit line

Angola government arranging US$3,5b bank credit line

ANGOLA’S government is arranging a credit line worth about US$3,5 billion from a syndicate of Portuguese and local banks, with an initial US$1 billion to be finalised next month, banking sources said on Wednesday.

stify>Angola’s Banco Africano de Investimentos (BAI), which is partly owned by state-run oil company Sonangol, will be responsible for raising about US$400 million in the first tranche in November.

Banco de Fomento Angola (BFA), Angola’s largest bank and a subsidiary of Portugal’s BPI, and Banco Espirito Santo Angola (BESA), which is controlled by Portugal’s Banco Espirito Santo, will each raise $200 million.

The remainder will be funded by local Angolan banks in what will be the largest loan ever funded by the southwestern African nation’s banking sector.

“There will be three tranches in total, with a total of about US$3,5 billion planned,” a foreign banker in Luanda who is familiar with the credit arrangement told Reuters on condition of anonymity.

“But it’s a done deal and the first US$1 billion will probably be finalised in November,” the banker added.

The funds would be subject to a five-year repayment period at an interest rate expected to be between 3,25% and 3,75% over LIBOR, the source said.

Most of the financing was to come from external sources rather than in Angola.

Another banking source confirmed the deal.

Angola, which emerged from a devastating 27-year civil war in 2002, has funded much of its reconstruction through foreign credit, including a multi-billion dollar oil-backed credit line from the Eximbank of China.

The exact amount of the Chinese credit is unknown, though it is believed to be between US$4 billion and US$11 billion.

Angola has been able to tap global financial markets because of its emergence as one of Africa’s top oil producers and the double-digit growth that has marked its oil-fueled economy in recent years.

Angolan authorities, however, are increasingly looking to internal sources of credit to fund the reconstruction of infrastructure in the country, sub-Saharan Africa’s second-largest oil producer after Nigeria.

The Angolan banking sector has mushroomed in recent years, with more than a dozen banks now on the market.

But very few of the country’s 16 million people — most of whom live in dire poverty — use banking facilities. — Reuters.

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