Angola to roll over $1 billion JPMorgan debt facility, finance ministry says

By Miguel Gomes

LUANDA, Nov 26 (Reuters) - Angola will roll over a $1 billion debt facility with JPMorgan JPM.N that is close to maturity, a senior official at the finance ministry told Reuters on Tuesday.

The southern African nation will seek to lower the interest rate of the facility when it is extended, said the official, who did not want to be named because the terms of the deal have not been concluded, without providing further detail.

The original rate was not disclosed but the finance ministry said in May it was just below 9%. JPMorgan declined to comment on the extension agreement or the review of terms.

"Only the decision to extend has been made. The agreement itself has not yet been finalised," the finance ministry official said.

Angola and JPMorgan agreed to a $1 billion, one-year derivative contract known as a Total Return Swap almost a year ago, backed by $1.9 billion in Angolan government dollar bonds that were created for the purpose.

The bank demanded $200 million in additional security in April after the value of the bonds put up as collateral weakened when the U.S. imposed sweeping trade tariffs on countries.

The bonds recovered and the government got the additional security back. The bond was quoted at 99.8 cents on the dollar on Tuesday, market participants said.

OFF-SCREEN DEALS

Frontier economies with low credit ratings and high debt burdens have been increasingly turning to complex and unorthodox financing deals like Angola's contract with JPMorgan to raise funds, prompting calls for increased transparency.

Senegal, Gabon and Cameroon are among countries to have resorted to so-called "off-screen" deals like private placements and loans in the recent past, as heavy debt burdens and political uncertainty in some cases limit their access to regular issuance.

Angola's finance ministry has defended its deal with JPMorgan. The government did not actually raise cash with the $1.9 billion bonds, but used them as collateral for two tranches of $600 million and $400 million loan financing from JPMorgan, to avoid adding debt to its books.

The crude oil exporter is saddled with high external debt to various creditors, including oil-backed loans from China, and currently has no financing programme with the International Monetary Fund.