The 2-year Obrigacao do Tesouro Nao Reajustavel (OTNR) is the shortest-dated fixed-rate bond on Angola’s domestic sovereign curve. Offering a nominal yield of approximately 20.0%, it represents the entry point into coupon-bearing government securities for investors stepping beyond the treasury bill market.
| Indicator | Value | Change |
|---|---|---|
| Current Yield | ~20.0% | — |
| BNA Policy Rate | 17.5% | — |
| Coupon Frequency | Semi-annual | — |
| Inflation (YoY) | ~15.7% | — |
| Minimum Investment | AOA 1,000 | — |
| IAC Tax Rate | 15% | — |
How the 2-Year OTNR Works
The 2-year OTNR is a fixed-rate, coupon-bearing bond denominated in Angolan Kwanza. At issuance, a coupon rate is set – currently around 20.0% annualized – and remains unchanged for the full two-year term. Coupon payments are made semi-annually (cupao semestral), meaning the investor receives approximately 10.0% of face value every six months. Principal is returned in full at maturity.
The Ministerio das Financas issues 2-year OTNRs through competitive auctions managed by the BNA. Primary dealers (operadores de mercado primario) submit yield-based bids, and the BNA fills bids from lowest yield to highest until the target volume is reached. Non-competitive bids at the weighted-average yield are also accepted. Settlement follows T+2 conventions through the Sistema de Liquidacao de Titulos on BODIVA, and bonds are held in dematerialized form at the central securities depository (Central de Valores Mobiliarios). The minimum investment is AOA 1,000.
Current Market Context
At a yield of approximately 20.0%, with the BNA policy rate at 17.5% and year-on-year inflation at roughly 15.7% (Instituto Nacional de Estatistica), the 2-year OTNR offers a positive nominal spread over the policy rate and a modest real return before tax. However, after the 15% IAC withholding on coupons, the effective net yield falls to around 17.0%, which is only marginally above inflation. The spread over the 364-day BT – currently about 300 basis points – compensates investors for the additional year of duration risk and the shift from a discount instrument to a coupon-bearing one.
The 2-year OTNR is particularly sensitive to monetary-policy expectations. If the market anticipates BNA rate cuts within the next 24 months, the 2-year yield tends to decline as investors lock in current rates, pushing bond prices higher. Conversely, any signal that tightening will persist puts upward pressure on yields and downward pressure on existing bond prices.
Who Should Buy
The 2-year OTNR suits investors who want higher returns than treasury bills offer but are not ready to commit capital for five or more years. It is a natural fit for corporate treasurers managing medium-term reserves, banks seeking to match 2-year deposit liabilities, and retail investors with a moderate risk tolerance and a view that inflation will continue to decline.
Investors who need maximum liquidity should remain in the 91-day or 182-day BT market instead. Those willing to extend duration for better yields and a lower tax rate should consider the 3-year OTNR, which crosses the threshold for the preferential 10% IAC rate.
Tax Treatment
The Imposto sobre a Aplicacao de Capitais (IAC) applies at 15% on coupon income for the 2-year OTNR. Because its original maturity is two years – not exceeding the three-year threshold – it does not qualify for the reduced 10% rate available on longer-dated sovereign bonds. Tax is withheld at source on each semi-annual coupon payment by the custodian bank. Any capital gains realized from selling the bond on the secondary market before maturity may also be subject to taxation; investors should confirm the applicable treatment with their custodian or tax adviser.
Comparison to Alternatives
| Feature | 364-Day BT | 2-Year OTNR | 3-Year OTNR | USD OTX |
|---|---|---|---|---|
| Indicative Yield | ~17.0% | ~20.0% | ~20.5% | ~7–9% + FX |
| Tenor | 1 year | 2 years | 3 years | 3–5 years |
| Coupon | Discount | Semi-annual | Semi-annual | Semi-annual |
| IAC Tax Rate | 15% | 15% | 10% | 10% |
| Currency Risk | Kwanza | Kwanza | Kwanza | FX-indexed |
The 2-year OTNR picks up roughly 300 basis points over the 364-day BT but carries twice the duration. For investors who can hold for one additional year, the 3-year OTNR adds only about 50 basis points in yield but drops the IAC rate from 15% to 10% – a meaningful after-tax benefit. Investors seeking protection against Kwanza depreciation should evaluate OTX FX-indexed bonds as an alternative.
How to Buy
- Primary auction – Submit competitive or non-competitive bids through an authorized primary dealer ahead of the BNA auction deadline. The quarterly calendario de emissoes lists scheduled dates and indicative volumes.
- Portal do Investidor – BODIVA’s online portal allows registered individual investors to place non-competitive orders for new issuances and to trade on the secondary market.
- Secondary market via BODIVA – Outstanding 2-year OTNRs trade on the mercado secundario. The 2-year is among the more liquid OTNR tenors, though spreads may widen during periods of elevated volatility.
A securities account (conta de titulos) at an authorized custodian bank and a valid Numero de Identificacao Fiscal (NIF) are required.