Obrigações do Tesouro (Treasury Bonds)

Overview

Obrigações do Tesouro (OTs), or Treasury bonds, are medium- to long-term sovereign debt securities issued by the Republic of Angola through MINFIN (Ministry of Finance). They constitute the principal instrument for long-term government financing and are a core component of the investable universe on the BODIVA exchange. OTs are issued in two primary forms: OTNR (fixed-rate kwanza-denominated bonds) and OTX (foreign-currency-indexed bonds), each serving different investor needs and risk profiles.

Types of Treasury Bonds

OTNR (Fixed-Rate Kwanza Bonds)

OTNRs pay a fixed coupon in kwanza and are redeemed at par at maturity. They offer investors certainty on nominal cash flows but carry exposure to inflation (15.7%, December 2025 INE) and kwanza depreciation (USD/AOA at 914.60). OTNR yields are typically set with reference to the BNA policy rate (17.5%) plus a term premium.

OTX (FX-Indexed Bonds)

OTXs are kwanza-denominated but indexed to foreign exchange rates (typically USD or EUR). This structure provides investors with protection against kwanza depreciation, effectively creating a synthetic foreign currency exposure without the legal and settlement complexities of offshore instruments. OTXs have been particularly attractive to both domestic and foreign investors seeking to mitigate the currency risk inherent in a market where the kwanza has experienced significant depreciation.

Issuance and Trading

MINFIN publishes an indicative issuance calendar, allowing investors to plan participation in primary auctions. Secondary market trading on BODIVA provides liquidity for investors seeking to adjust positions before maturity, though secondary market depth varies by maturity and type.

Role in Angola’s Debt Structure

OTs are essential to Angola’s sovereign debt management:

• Maturity extension: Longer-dated OTs reduce the government’s rollover risk compared to reliance on short-term Bilhetes do Tesouro alone
• Investor diversification: OTXs attract foreign and FX-sensitive investors, broadening the government’s funding base
• Yield curve construction: OT pricing across maturities, combined with BT rates, establishes a sovereign yield curve that benchmarks all kwanza-denominated credit
• Debt-to-GDP management: At 59.9%, Angola’s debt ratio requires careful maturity and cost management, which the OT programme facilitates

Investor Base

OTs are held by a broad range of investors:

• Commercial banks: The dominant holders, using OTs for balance sheet management and regulatory purposes. Banks like BAI, BFA, BIC, and BCGA hold significant OT portfolios.
• Insurance companies: ENSA and other insurers hold OTs as part of their investment portfolios under ARSEG guidelines
• Pension funds: Growing participation as Angola’s institutional investor base develops
• Retail investors: Via the Portal do Investidor platform
• Foreign investors: Through custody accounts at licensed custodian banks

Investor Considerations

Key factors for OT investors include:

• Sovereign credit risk: Angola’s ratings (S&P B- / Moody’s B3 / Fitch B-) reflect the concentrated fiscal dependence on oil and the structural reform trajectory
• Inflation vs. coupon: OTNR holders must assess whether fixed coupons compensate for inflation (15.7%) and potential further depreciation
• FX indexation mechanics: OTX investors should understand the specific indexation formula, reference rates, and settlement currency
• Liquidity premium: Longer-dated OTs may trade with a liquidity discount in the secondary market relative to shorter BTs
• Tax treatment: Coupon income is subject to the Imposto sobre a Aplicação de Capitais (IAC), with rates and exemptions administered by AGT and subject to the CEOC framework for foreign investors

OTs, alongside Bilhetes do Tesouro, form the complete sovereign fixed-income investable universe for Angola’s capital markets.