By Karin Strohecker and Libby George
LONDON (Reuters) – Angola will decide by November whether to roll over its $1 billion total return swap deal with JPMorgan, or potentially raise the money on international capital markets, a senior debt official told Reuters.
JPMorgan and Angola agreed in December a $1 billion, one-year derivative contract known as a total return swap, backed by $1.9 billion in government dollar bonds, which will expire at the end of this year.
“We have some options,” Dorivaldo Teixeira, General Director of the Public Debt Management Unit at Angola’s finance ministry, told Reuters on the sidelines of investor meetings in London.
If market conditions were right, Angola could issue debt to raise the funds, repay partially, or extend the current arrangement.
“It depends on the cost,” he said. While he said the market conditions for smaller, riskier issuers were improving, with yields “going in the right direction”, he noted that the JPMorgan facility cost was lower than the country’s Eurobonds and “if I can extend it, probably I will use it.”
CONTAINING THE COSTS
The yield on Angola’s international bonds currently stands at roughly 10%, according to JPMorgan EMBI data.
Still, he said Angola would push for a better deal than the current 9% it was paying on the arrangement, whether that was from the bank or from markets. The full terms of the total return swap have never been published.
The deal grabbed headlines in April, when Angola had to pay $200 million to JPMorgan as additional security for its collateralised bond in a margin call after U.S. tariff turmoil pushed oil prices – and Angola’s bonds – sharply lower.
In November, the country also has to pay back just over $860 million it has outstanding on a dollar-denominated bond it sold in 2015.
Finance officials are also working to increase transparency by publishing debt statistics more regularly, Teixeira said. The finance ministry has started issuing its debt bulletin quarterly, and it is aiming to publish monthly starting next year, while ensuring key information and statistics are available in English as well as Portuguese.
“The perception of risk of Angola was heightened a little bit because we didn’t communicate as much. People need more information about what’s going on,” Teixeira said in an interview late on Thursday, adding he hoped this would help lower Angola’s borrowing costs.
CAUTIOUS ON CRUDE
Teixeira said finance officials are pressing for a more conservative oil price assumption in the 2026 budget after the government had to stress-test its 2025 spending due to a drop in prices below their $70 per barrel assumption.
Brent crude is trading at $67, and Teixeira said the final budget deficit figures could be higher than expected due to the fall in revenue.
“One of the lessons that we learned from this, from this process, is probably next year, we should take a little bit more conservative approach that will help us to execute the budget in the most seamless way.”
Teixeira declined to peg a specific price but said officials base their assumptions on top analyst forecasts.
A Reuters poll showed most analysts expect prices to drift down next year, with Brent forecast at $62.98 in the second quarter of 2026.
(Reporting by Karin Strohecker and Libby George, editing by Amanda Cooper and Hugh Lawson)
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