Bloomberg reports that Angola used around $200 million as additional collateral for a $1 billion loan from JPMorgan Chase & Co., after the country’s dollar-denominated bonds dropped alongside crude oil prices earlier this week. The funds have now been used to meet a margin call, Bloomberg reported Friday.
“The $200 million was used to respond to a margin call on the JPMorgan loan,” said Angola’s Ministry of Finance, quoted by Bloomberg, noting the market turbulence affecting the bonds. Angola had initially set aside the amount as additional security after its dollar bonds fell in line with oil price declines.
Those same $200 million have now been tapped to meet JPMorgan’s margin call, due to the impact of market volatility on the bonds.
The southern African country issued about $2 billion in bonds in December and January as collateral for the $1 billion loan from JPMorgan.
“The current scenario has affected commodity markets and emerging market eurobonds, including the trading level of Angolan eurobonds, which triggered a margin call,” the government said in a statement.
“Angola fulfilled its obligation in a timely manner and in cash,” the statement added.
A margin call is a risk management measure that helps investors avoid additional losses by requesting more collateral to maintain agreed ratios — or, if not met, forces the sale of assets. It also protects the institution, in this case JPMorgan, from steep losses.
By definition, a margin call happens when the broker asks the client to add funds or sell assets to restore the agreed leverage ratio.
Angola’s dollar bonds took a hit after U.S. President Donald Trump announced sweeping tariffs last week, some of which were reversed just hours after being imposed. The move shook markets and pushed oil prices down.
The International Monetary Fund (IMF) estimates that Angola loses about $152 million in revenue for every $1 drop in the price of oil below the $70 per barrel average forecast by authorities for 2025. As of yesterday, Brent crude was trading at $64.13.
Although the current situation is challenging and calls for caution, Angola’s debt trajectory remains “solid and on a stable path,” the Finance Ministry said.
Angola is awaiting improved market conditions before issuing its first eurobond in three years, said Dorivaldo Teixeira, head of the country’s debt management unit, in an April 1 interview with Bloomberg.
Source: Jornal Económico
