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Old July 22nd, 2010, 06:25 AM   #1
popa1980
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Angola's debt bombshell leaves bond plans in ruins

* Shock admission of $9 billion in unpaid building bills
* Debt repayment depends on oil prices
* "Forget about" eurobond plans
By Ed Cropley, African Investment Correspondent
JOHANNESBURG, July 21 (Reuters) - Oil-rich Angola's shock admission that it has $9 billion in unpaid building bills has sunk any immediate chance of issuing up to $4 billion in foreign debt but may mark a turning point for its secretive rulers.
The mess stems from Angola's reliance on oil for more than 80 percent of its official revenues, and the building boom that has gripped the country, and especially its capital, since a long civil war ended in 2002.
When oil prices collapsed in late 2008, revenue dried up but the construction wave that has turned Luanda into one of the world's most expensive cities churned on regardless.
Lots of shiny new soccer stadiums for the African Cup of Nations soccer tournament in January only made matters worse.
Even though it produces 1.5 million barrels or more of oil a day, $9 billion is a large sum for the country of 16 million, equating to a quarter of the annual budget and nearly two-thirds of stated foreign exchange reserves.
A degree of fuzziness with official data is common in most of frontier Africa, and investors had known for months Angola had fallen behind with payments to the Portuguese and Brazilian firms rebuilding after the end of the civil war.
But the sheer size of the arrears -- around three times prior estimates -- and the cack-handed nature in which they became known, with President Jose Eduardo dos Santos putting the debt at $6.8 billion on Monday only to be trumped by the Finance Ministry with $9 billion on Tuesday, left outsiders speechless.
"Wow. It's shocking. These are huge amounts," said Coura Fall, an African frontier market analyst at Citibank in Johannesburg. "They can forget about any eurobond now."
"People are asking questions about the finances. What is the government revenue on a monthly basis? How much do they owe to other creditors? Who do you trust?"
CAN PAY, WILL PAY -- EVENTUALLY
In a rare news conference, dos Santos, who has been in charge for 30 years, said all debts would be honoured, with smaller firms being paid in full in two months and larger ones getting 40 percent this year and the rest "in one or two years".
But his words are unlikely to fill prospective investors with confidence, especially since the chances of being paid depend on the direction of oil prices. Another sustained drop because of a "double-dip" world recession would be disastrous.
"It would make you think twice about your ability to be paid," said Stuart Culverhouse of London-based brokerage Exotix. The bond issue, which already appeared to be dropping in Luanda's priorities, would "clearly be delayed", he added.
However, Alex Vines, an Angola expert at the Chatham House think-tank in London, said dos Santos' unprecedented admission suggested there were no other skeletons in the cupboard, and could usher in the honesty outside investors so crave.
The Finance Ministry has already decided to impose "more rigour and transparency" on government departments.
"The history of Angola is that it does pay -- it's just quite slow," Vines said.
"Of course this will be a reality check, but as long as it turns out to be accurate and isn't the tip of a greater iceberg of unpaid bills, investors should kind-of welcome this."
IMF, RATINGS AGENCIES
The revelations mark a rude return to earth for a country that sees itself as vying with Nigeria to be Africa's biggest crude producer, and a future darling of foreign investors with grand plans for a stock market and issuance of up to $4 billion in dollar bonds. What makes it worse is that Luanda, with bond issuance in mind, had received credit ratings from S&P, Moodys and Fitch in May with a favourable 'B+' outlook based on strong growth prospects and low levels of government debt.
The agencies, though nervous about the secrecy in which dos Santos' administration cloaks itself, assessed external debt at 18 percent of GDP, or around $18 billion.
The ratings followed the approval by The International Monetary Fund (IMF) of a $1.4 billion loan programme last year.
In an assessment of the economy released in May, the IMF estimated Angola's 2009 external debt at $14.9 billion, and under "external arrears" -- which should include late payments to foreign construction firms -- listed a paltry $500 million.
Yet the revelations of the debts scale was serious enough for Portuguese President Anibal Cavaco Silva to fly to Luanda this week to press for payment. (Additional reporting by Henrique Almeida)
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Old July 22nd, 2010, 07:15 AM   #2
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Well, wow. They better manage the boom. No emirate rescue package from the emirate.
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Old July 22nd, 2010, 07:35 AM   #3
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Mattias offodile will write them a check(while cheerleading gleefully of course). . .no worries here
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Old July 22nd, 2010, 08:31 AM   #4
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as much as i love brotha Matthias...this thread wont be pleasant ....u might some of his views as i have but my brotha have been spot on...despite his hatred for americans. or anything american......anything negative about angola wont be pleasant.
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Old July 22nd, 2010, 08:45 AM   #5
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Let the ugliness begin!

███████████████] 99%
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Old July 22nd, 2010, 08:49 AM   #6
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Quote:
Originally Posted by Xusein View Post
Let the ugliness begin!

███████████████] 99%





Popa1980,

You better have a super shield.
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Old July 22nd, 2010, 08:56 AM   #7
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i think this wont affect angola much AS LONG AS THEY PAY THEIR BILLS. what it will do is that they will scale back some of their ambitious plans but thats about it.

i believe there wont be another recession soon, things for the world economy hit rock bottom so the world economy can only get better which means demand for oil will available and angola will be there to provide the oil. hence angola wont be running out of money anytime soon hence it will be able to pay its bills.

i am not yet buying into the doom and gloom for angola just yet.
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Old July 22nd, 2010, 09:04 AM   #8
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This building boom should be aimed at angolans(which some is) with better housing,roads/sewers and hospitals first.Second (and most important)should be angolan skills enhancement to free them from reliance on foreign knowhow(chinese) in construction/maintenance and oil exploration/production to ensure their economy runs on angolan skills.Any other building going on should have sound economic criteria like hotel dev't with a true market. Any fntasy project like in Dubai should be scrapped as this debt is an oncoming train at the end of the angolan tunnel.A lot of people are excited about an upcoming glittering Luanda but i'd love to see real skills,industries and the economy in Angolan hands than towers aimed at rich fickle foreigners.Afterall Norway,E Guinea and Abu dhabi have not rushed for towers and have high debt free economies.
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Old July 22nd, 2010, 09:05 AM   #9
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So this is basically a game of chance. global economy heads south again, oil prices fall, less revenue for Angolan govt, which translates into debts being paid off during a later date.

Quote:
"Wow. It's shocking. These are huge amounts," said Coura Fall, an African frontier market analyst at Citibank in Johannesburg. "They can forget about any eurobond now."
If the govt invested the money from oil revenue and foreign creditors wisely then a widening taxbase should allow them to pay off the debts. Besides, external debt of 18% of GDP can't be that bad unless the government is paying outrageous interest rates on it.

Oil prices will rise in coming years, definitely. Add that in with the government's investment in diversfying the economy, and gdp growth in the double digits all of this worry should be forgotten.
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Old July 22nd, 2010, 09:12 AM   #10
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Yikes, where's Matthias

If the country wants to regain credibility and the confidence of investors, they have to repay the entire amount rapidly, be more responsible in the future (more conservative) and lift the secrecy.

Good luck to Angola. There are real concerns that we could head into a W shaped recession (double dip), in which case they're screwed.

Last edited by abesha; July 22nd, 2010 at 09:19 AM.
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Old July 22nd, 2010, 11:11 AM   #11
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So is this bust for Angola like Dubai?

I hope this is nothing too serious, we cant afford having dept anywhere in Africa, we have a bad record of paying back.
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Old July 22nd, 2010, 11:39 AM   #12
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popa1980, you are just incredible!!

Your envy seems to eat you up!

You are not a friend of Africa - no matter how often you keep on telling it - and go to great length as to search the internet for articles to keep certain countries down...I have obeserved it over and over again the past years!

And I will never forget your message that you once sent to me on my PM in which you told me that you are sure that Angola will go back to war and get destroyed again and that ALL the construction will be fruitless....we had a heated discussion and I shouted at you over that issue...does it ring a bell?...



By the way,

The very same Popa1980 who doesnīt leave a stone unturned to discredit me by telling me that I preached colonialism and love white people has written this message about his "cherished homecountry" Ghana...at the same time he spreads "panafricanist & and die-hard black African" notions and tells in many threads that I would hate to be black and that white people ONLY destroyed Africa...and goes as far as to accuse me of being a "white supremacist"...suddenly came up with this.

Everybody with a grain of intelligence know how Popa1980 really ticks. he is a shamelessly hypocritical.

.

Quote:
Originally Posted by popa1980 View Post

Tamale is awful considering it is the 3rd city (though I would say Sekondi-Takoradi is the 3rd). Like many African countries not much developmnet has taken place outside the capital since the colonials left. So many of the cities and towns in Ghana are stuck in 1957, except the colonial buildings have deteriorated. I would like to see more development in the North of Ghana, it is almost like a different country to the Southerners.

http://www.skyscrapercity.com/newrep...ply&p=21151942


Moreover, I can go on and search for many more statements like this which I have detected again and again and which perfectly contradicts to what he has been telling here ...but I donīt feel like doing it.
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Old July 22nd, 2010, 12:03 PM   #13
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It seems that Angola is doing the same mistake that a lot of oil contries did a couple decades ago and allmost destroyed their economies. And that is building their economies on a high oil price..

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Old July 22nd, 2010, 12:21 PM   #14
Matthias Offodile
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Angola gets first credit ratings

Quote:
Thursday, 20 May 2010

Oil-rich Angola on Wednesday received its first international credit ratings, making it easier for Luanda to raise money on the global market and to finance ambitious reconstruction projects.
Bankgraph_Side

The three major international agencies - Moody's, Standard & Poor's, and Fitch - said that Angola could rely on steady oil revenue but still needed to improve its governance.

Moody's gave Angola a B1 rating, while S&P and Fitch both gave B+ ratings.

"The ratings on Angola are supported primarily by our view of the country's large hydrocarbon endowment, strong growth prospects, and low government and external debt levels," S&P said.

"Nevertheless, the ratings are constrained by our view of the country's narrow economic base, its short and mixed financial and economic policy track record... and weaknesses in governance and institutions," it added.

"In addition, presidential succession is untested in post-conflict Angola and, given the country's centralized decision-making process, entails a risk to policy continuity."

Angola has for years considered obtaining an international rating, which would make it easier and cheaper for the government to tap global credit markets.

Currently Angola relies heavily on China for loans to pay for its post-war reconstruction.

The southern African country has already received at least five billion dollars in credit from Beijing, but the World Bank believes up to eight billion dollars more has not been publicised.

Sapa-AFP

http://www.africagoodnews.com/econom...t-ratings.html

I donīt know why certain people inwardly long to see certain countries fail while at the same time they pretend to see a proeperous Africa that advances...this only seems to stick for certain countries, doesnīt it?

As for the credit with China, it is paid back with oil and other minerals! China has done a lot to help Angola
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Old July 22nd, 2010, 12:54 PM   #15
I.M Boring
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tl;dr You didn't need to start a whole new topic though
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Old July 22nd, 2010, 06:14 PM   #16
popa1980
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Quote:
Originally Posted by Matthias Offodile View Post
popa1980, you are just incredible!!

Your envy seems to eat you up!

You are not a friend of Africa - no matter how often you keep on telling it - and go to great length as to search the internet for articles to keep certain countries down...I have obeserved it over and over again the past years!

And I will never forget your message that you once sent to me on my PM in which you told me that you are sure that Angola will go back to war and get destroyed again and that ALL the construction will be fruitless....we had a heated discussion and I shouted at you over that issue...does it ring a bell?...



By the way,

The very same Popa1980 who doesnīt leave a stone unturned to discredit me by telling me that I preached colonialism and love white people has written this message about his "cherished homecountry" Ghana...at the same time he spreads "panafricanist & and die-hard black African" notions and tells in many threads that I would hate to be black and that white people ONLY destroyed Africa...and goes as far as to accuse me of being a "white supremacist"...suddenly came up with this.

Everybody with a grain of intelligence know how Popa1980 really ticks. he is a shamelessly hypocritical.

.





Moreover, I can go on and search for many more statements like this which I have detected again and again and which perfectly contradicts to what he has been telling here ...but I donīt feel like doing it.
Matt, why would you lie about a thing like that? There was no such message from me to you even though you keep repeating the lie and keep on failing to provide a copy of this alleged message I sent you.

Anyway, this underlies the corruption in the Santos regime. There is no way Angola should have problems paying contractors.

For everyones info, Matt is pissed off because he posted an 8 min youtube video of the "good old colonial days" of Angola, and I pointed out to him that all the people enjoying themselves in the bars, restaurants, races etc were white and all the poor people were black. Kinds of destroys his revisionist fantasy that everyone was equal.
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Old July 22nd, 2010, 06:16 PM   #17
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Quote:
Originally Posted by Head Of State View Post
This building boom should be aimed at angolans(which some is) with better housing,roads/sewers and hospitals first.Second (and most important)should be angolan skills enhancement to free them from reliance on foreign knowhow(chinese) in construction/maintenance and oil exploration/production to ensure their economy runs on angolan skills.Any other building going on should have sound economic criteria like hotel dev't with a true market. Any fntasy project like in Dubai should be scrapped as this debt is an oncoming train at the end of the angolan tunnel.A lot of people are excited about an upcoming glittering Luanda but i'd love to see real skills,industries and the economy in Angolan hands than towers aimed at rich fickle foreigners.Afterall Norway,E Guinea and Abu dhabi have not rushed for towers and have high debt free economies.
Exactly! There are some people, well one in particulalar, who seems to judge Angolas development by such empty development.
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Old July 23rd, 2010, 01:45 PM   #18
Matthias Offodile
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Quote:
Originally Posted by popa1980 View Post
Matt, why would you lie about a thing like that? There was no such message from me to you even though you keep repeating the lie and keep on failing to provide a copy of this alleged message I sent you.

Anyway, this underlies the corruption in the Santos regime. There is no way Angola should have problems paying contractors.

For everyones info, Matt is pissed off because he posted an 8 min youtube video of the "good old colonial days" of Angola, and I pointed out to him that all the people enjoying themselves in the bars, restaurants, races etc were white and all the poor people were black. Kinds of destroys his revisionist fantasy that everyone was equal.
Popa1980 take your tablets, it is urgent!

And I am not lying, you wish the worst for Angola....you

You are the one who is lying and is full of hypocrisy (as shwon in that link which I provided above)...people with a ...I posted 8 min ago a video on Angolaīs colonial days...LOL...I have been absent on this page for the past 24 hours so how can I have posted any news the past 8 minutes...Again one of the constant lies of yours..

Boy, you really make me sick...i wonder why I still respond to your garbage postings!

Your contribution to this webpage and other sub-forums has absolutely been zero....as you take delight in certain countries to fail.
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Old July 23rd, 2010, 03:07 PM   #19
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This is great news for Angola. The president himself gave a news conference. Angola is opening up. And it seams like instead of doing it little by little they have jumped in head on in to open transparency governing. This is great news for investors. Angola already has a record and reputation of paying her bills even when it was in a 30 year war, now no war and add to that this big bombshell of transparency governing, I would say withing 3 years Angola will be the talk of the town, the new kid on the block and the darling of any investor anywhere in the wolrd. It will now move rapidly in reforming and the economy will now move breakneck speed. This is my opinion.
sinserly,
Jules3c.
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Old July 23rd, 2010, 03:08 PM   #20
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This is great news for Angola. The president himself gave a news conference. Angola is opening up. And it seams like instead of doing it little by little they have jumped in head on in to open transparency governing. This is great news for investors. Angola already has a record and reputation of paying her bills even when it was in a 30 year war, now no war and add to that this big bombshell of transparency governing, I would say withing 3 years Angola will be the talk of the town, the new kid on the block and the darling of any investor anywhere in the wolrd. It will now move rapidly in reforming and the economy will now move breakneck speed. This is my opinion.
sinserly,
Jules3c.
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