Luanda – World Bank group’s International Finance Cooperation (IFC) and the Hemera Capital Partners Thursday signed an agreement to strengthen the capital market and channeling the new funding sources for Angolan companies in need of working capital.
This is expressed in a press release sent to ANGOP on Friday, stating that the deal will allow the two institutions to work with various stakeholders of the market.
The objective is to structure an investment vehicle to foster the business in the country´s secondary bond market.
The note states that IFC and Hemera Capital Partners expect the launch of the investment vehicle in the coming months, subject to approval by the management of both organisations’ boards of directors.
“Although at an early stage of development, the capital market has the potential to boost the private sector,” said Miguel Raposo Alves, Hemera Capital Partners CEO, quoted by the document as saying.
IFC’s Hector Gomez said that “the investment vehicle, when implemented, will help to channel much-needed liquidity to private companies and will represent an important step in the development of the local capital market as a source of financing for Angola´s private sector”.
The local capital markets can protect an economy from volatile capital flows, reduce a country´s dependence on external debt, as well as provide risky financing, increasing long-term, local-currency access for the private sector, a key factor to business growth and job creation.
According to the note, the Angolan government is currently the only active issuer of the country´s bonds while the finance institutions have been the main investors in these bonds.
The recent recession caused by the fall of the oil price and worsened by covid-19, led to a liquidity crisis in the secondary bond market.
It is estimated that the market for Treasury Bonds issued for the settlement of arrears stands at around USD 1.5 billion.
