The USD-indexed Obrigacao do Tesouro Indexada (OTX) provides Angolan sovereign bond exposure with built-in protection against Kwanza depreciation relative to the US Dollar. Both coupon and principal payments are adjusted for movements in the AOA/USD exchange rate, making this instrument effectively a dollar-return vehicle settled within Angola’s domestic market infrastructure.
| Indicator | Value | Change |
|---|---|---|
| Indicative Coupon | ~7–9% | — |
| Reference Currency | USD (AOA/USD) | — |
| BNA Policy Rate | 17.5% | — |
| Inflation (YoY) | ~15.7% | — |
| Minimum Investment | AOA 1,000 | — |
| IAC Tax Rate | 10% | — |
How the USD-Indexed OTX Works
The USD-indexed OTX is denominated and settled in Kwanza, but the face value is pegged to a USD-equivalent amount determined by the BNA reference exchange rate at the time of issuance. At each semi-annual coupon date (cupao semestral), the coupon payment in Kwanza is recalculated by applying the coupon rate to the original USD-equivalent face value, then converting at the prevailing BNA exchange rate. At maturity, the principal redemption follows the same conversion.
For example, suppose an investor purchases AOA 10,000,000 in face value when the AOA/USD rate is 850. The implicit USD-equivalent face value is approximately USD 11,765. If the coupon rate is 8%, each semi-annual payment would be 4% of USD 11,765, or approximately USD 470, converted to Kwanza at the exchange rate prevailing on the payment date. If the Kwanza has depreciated to 950 per USD by the coupon date, the Kwanza payment would be roughly AOA 447,000 rather than the AOA 400,000 it would have been at the original rate. At maturity, the principal is similarly adjusted, so the investor receives the Kwanza equivalent of USD 11,765 at the final exchange rate.
Settlement occurs T+2 through BODIVA’s Sistema de Liquidacao de Titulos. All bonds are held in dematerialized form at the Central de Valores Mobiliarios. The minimum investment is AOA 1,000. OTX bonds are issued through competitive auctions by the BNA, with non-competitive bids accepted at the weighted-average yield.
Current Market Context
Angola’s economy remains heavily dollarized in trade terms – oil exports, which account for the majority of government revenue, are priced in USD. The BNA has managed a controlled depreciation of the Kwanza over recent years, and the AOA/USD rate has moved from roughly 650 in early 2023 to the mid-800s range by early 2026. For investors who expect this depreciation trend to continue, the USD-indexed OTX provides a mechanism to benefit from (or at least neutralize) exchange-rate movements while earning a coupon of 7–9%.
At the BNA policy rate of 17.5% and inflation of approximately 15.7%, the nominal coupon on the USD OTX appears low compared to OTNR yields of 20–22%. However, the total return calculation must include the FX adjustment. If the Kwanza depreciates by, say, 10% annually, the effective Kwanza return on a USD OTX with an 8% coupon would be roughly 18–19%, competitive with or superior to an OTNR on a risk-adjusted basis – and with far less real purchasing-power risk.
Who Should Buy
The USD-indexed OTX is ideal for:
- Diaspora investors earning in USD who want Angola sovereign exposure without full Kwanza risk. The FX indexation ensures returns are meaningful when converted back to dollars.
- Importers and corporations with USD-denominated cost structures. Holding a USD-indexed bond provides a natural hedge against the same exchange-rate movements that increase their operating costs.
- Foreign portfolio investors who want to access Angola’s domestic bond market without opening an offshore brokerage account for Eurobonds. The minimum investment of AOA 1,000 is far more accessible than typical Eurobond minimums of USD 200,000.
- Risk-averse domestic investors who believe the Kwanza will continue to weaken and prefer a lower nominal coupon with FX protection over a higher nominal coupon with full depreciation exposure.
Investors who are confident in Kwanza stability or appreciation should consider OTNR bonds for their significantly higher nominal coupons. Those with a Euro-denominated perspective may prefer the EUR-indexed OTX.
Tax Treatment
The Imposto sobre a Aplicacao de Capitais (IAC) applies at 10% on coupon income, as USD-indexed OTX bonds typically have original maturities exceeding three years. The FX adjustment component – the portion of each coupon payment attributable to exchange-rate movement – is generally included in the taxable base. Tax is withheld at source on each semi-annual payment by the custodian bank. Investors should confirm with their custodian or tax adviser whether FX gains on the principal redemption at maturity are subject to additional taxation.
Comparison to Alternatives
| Feature | USD OTX | 5-Year OTNR | Eurobond (~2030) | EUR OTX |
|---|---|---|---|---|
| Nominal Coupon | ~7–9% | ~21.0% | ~8–10% (USD) | ~7–9% |
| FX Protection | USD-indexed | None | USD-denominated | EUR-indexed |
| Effective KZ Return (if 10% depreciation) | ~18–19% | ~21.0% | N/A | ~18–19% |
| IAC Tax Rate | 10% | 10% | N/A (offshore) | 10% |
| Settlement | BODIVA (Kwanza) | BODIVA (Kwanza) | International (USD) | BODIVA (Kwanza) |
| Minimum | AOA 1,000 | AOA 1,000 | ~USD 200,000 | AOA 1,000 |
The USD OTX and the Eurobond offer similar dollar-return profiles, but the OTX is accessible through the domestic market with a much lower entry point. Against OTNR bonds, the USD OTX trades a higher nominal coupon for exchange-rate protection – a trade-off that favors the OTX in a depreciating-Kwanza environment and favors the OTNR when the currency is stable. Historical performance of the yield curve provides context for evaluating these relative dynamics.
How to Buy
- Primary auction – Submit competitive or non-competitive bids through an authorized primary dealer before the BNA auction deadline. OTX issuance dates appear in the quarterly calendario de emissoes.
- Portal do Investidor – BODIVA’s online platform enables registered individuals to place non-competitive orders for new issuances and to access the secondary market.
- Secondary market via BODIVA – Outstanding USD-indexed OTX bonds trade on the mercado secundario. Liquidity is thinner than for OTNR issues; spreads may be wider, and execution may take longer for larger sizes.
A securities account (conta de titulos) at an authorized custodian bank and a valid Numero de Identificacao Fiscal (NIF) are required. Non-resident investors should verify eligibility and any applicable repatriation procedures through their custodian before participating.