Angola is actively reviewing the possibility of issuing Panda bonds and sukuk as part of its efforts to diversify its sovereign funding base. This move is aimed at providing investors with new routes into the country’s sovereign debt market. According to Ottoniel dos Santos, secretary of state for finance and the Treasury, officials have not yet set an issuance size or timetable for these alternative funding instruments.
The decision on Panda bonds and sukuk will follow the completion of Angola’s 2027 budget. The country currently has no plans for further international bond sales before the end of 2026, giving Luanda time to compare bilateral loans, Eurobonds, and alternative instruments. This pause allows Angola to assess different funding channels offered by China and the Gulf. Panda bonds would enable Angola to borrow in China’s domestic market, denominated in renminbi.
Sukuk, on the other hand, would target investors seeking Sharia-compliant structures, with returns linked to assets or economic activity rather than explicit interest payments. Angolan officials visited Qatar, the United Arab Emirates, and Oman in 2025 to establish contacts with potential investors. These meetings were crucial in understanding the appetite for such financial instruments.
The motivation behind exploring Panda bonds and sukuk is to diversify the source of funding, reducing reliance on the same markets or investors each year. According to Ottoniel dos Santos, this diversification is a strategic move to widen the investor base and provide more options for funding. For investors, Panda bonds and sukuk carry different considerations, including currency and structuring.
Panda bonds would add renminbi exposure to investors’ portfolios, while sukuk require suitable assets and compliant documentation. By exploring these options, Angola is testing its funding flexibility before committing to another major market transaction. This approach is seen as a strategic move to optimize its debt management.
In 2026, Angola raised $4 billion through Eurobond issuance and used $1.2 billion for debt-management operations. This move eased the projected repayment pressure in 2028 and 2029, with repayments estimated at about $813 million and $1.3 billion, respectively. Despite oil revenues exceeding initial projections, Angola still expects $200 million to $400 million in financing needs for the rest of 2026.
Moody’s maintained Angola’s sovereign rating at B3 and raised its outlook to positive in September 2026, citing improved macroeconomic management. The agency expects public debt to equal about 46% of gross domestic product by the end of 2026, with interest costs projected to reach 23% of government revenue. With an inflation rate of 8.43% in September 2026, Angola is navigating its economic challenges while exploring new funding avenues.
Key points
- Angola is exploring Panda bonds and sukuk to diversify its funding base.
- The country aims to reduce reliance on traditional Eurobond markets.
- Officials expect to make a decision after completing the 2027 budget.
