Angola (rated BB- by Fitch, Ba3 by Moody’s and BB- by S&P) has enjoyed a nine-place leap in its Euromoney Country Risk score this year as it heads towards parliamentary elections at the end of August, continuing a long-term trend that has seen the sovereign jump 33 places over the past 20 years.
The country’s economic-GNP outlook score has worsened this year, which is symptomatic of a region-wide shift stemming from the slowing pace of global economic activity. However, all of the other 15 risk factors have improved.
Angola, a country of some 12 million, is still relatively high-risk – it is, after all, within the fourth of ECR’s five-tiered groups on a low score of 38.8 out of 100 – yet it has exchanged places this year with the more-populated sub-Saharan African sovereign Nigeria (a nation of 106 million people), lying in 98th place and down nine since January.
Not that the markets appear to have taken note. While the two sovereigns are being compared closely by investors, a quietly listed private-bond placement in Angola, in the form of a 2019 loan participation note worth $1 billion, fetched a 7% yield earlier this month, higher than the comparative yield of 5% in Nigeria and the 5.75% quoted for Namibia’s debut last year.
Angola’s rise in the rankings is explained by one of ECR's contributors Samir Gadio, Emerging Markets Strategist (Africa) at Standard Bank:
“A year ago, there was a perception that weak governance in Angola would be penalized, and the economy was not as open to foreign investment compared with Nigeria.
“However, a combination of foreign exchange reserves accumulation, better fiscal policy and public sector management are proving to be significant drivers behind Angola’s relative improvement.”