Standard & Poor’s (S&P) downgraded Angola’s long-term credit rating in domestic or foreign currency from “B” to “B-“, but maintained a stable outlook, according to the latest statement from the agency.
S&P backed up its decision with the dynamics of Angola’s fiscal revenue, which remains lower than originally forecast, as well as the size of sovereign debt servicing commitments in addition to the weakness of the country’s banking sector.
Angola’s debt servicing commitments have grown by more than expected, an increase that is due to the government taking on both internal and external loans to cover the fall in tax revenue, due to the continued drop in the price of oil, the country’s main export product.
Standard & Poor’s said in its credit rating assessment that the value of debt servicing could represent about 15% of tax revenues this year, up from 7% in 2015.
Angola’s economic outlook remains stable, according to the agency, as the country’s foreign reserves can help reduce the high current account deficit without being significantly affected.
The Angolan government announced last week that it intends to reissue debt in the form of Eurobonds under a presidential order authorising the finance minister to place up to 2 billion euros in order to “improve the composition of the portfolio of external debt. ”
Angola first issued Eurobonds in November 2015, raising US$1.5 billion through a syndicate of banks led by US-based Goldman Sachs International, which included Germany’s Deutsche Bank and China’s ICBC International.