The Ministry of Finance (MINFIN hereafter) – through its UGD – Public Debt Management Unit – deemed that the process of purchasing treasury bonds by investors in the retail segment remained far below the market potential in Angola. The formerly existing solution – the BNA Direct Treasury Counter – was similarly considered to be overly centralising given that this was the only distribution channel for the sale of these bonds, which led to difficulties in access to potential investors from other provinces.
Within the scope of fostering a greater dynamic and democratising access to public bonds, the BNA Direct Counter was closed and replaced by the INVESTOR WEBSITE, which went operational on 2 July 2018. This simultaneously aims to involve commercial banks in the process of boosting the pace and scale of the public debt market in Angola.
The key project participants are the following entities: UGD, SETIC-FP (on behalf of MINFIN), BODIVA and EMIS.
- UGD – Responsible for issuing public debt (BTs and OTs (Treasury Bills and Bonds)) in the primary market through the Website;
- SETIC – Holding competence for testing and guaranteeing the security and reliability of the Website’s information technology;
- BNA – Responsible for processing the auctions and the physical (registration) and financial settlement of the operations carried out on the Website;
- BODIVA – Responsible for holding the bonds acquired through the PORTAL;
- EMIS – Provides the payment services through the ATM network to process the payment of bonds.
The INVESTOR WEBSITE is an online platform that enables the acquisition of Treasury Bonds through a website (www.portaldoinvestidor.minfin.gov.ao) and with their payment made via ATM. Currently, it is not yet possible to ensure payment via Internet banking or direct debit but EMIS is working towards achieving these objectives.
Website characteristics and access procedures
a)Bond Market:those remaining after the main auction organised by BODIVA in the respective week. Whenever there are no remaining bonds from auctions, UGD commits to issuing new bonds in order to meet demand.
- b)Target Investors:The Website targets the Retail segment (both individual and collective entities) with the following maximum and minimum daily limits set for bond purchases:
Treasury Bills (BTs):
- Minimum: AOA 50,000
- Maximum: AOA 7,000,000
Treasury Bonds (OTs):
- Minimum: nominal amount corresponding to one bond:
OT-NR at the fixed rate - AOA 100,000 and
OTX at the indexed rate – currently AOA 324,535.67 (but varying in accordance with the official exchange rate)
- Maximum: AOA 20,000,000
These limits are daily and attributed to each NIF – taxation number. Hence, each Investor (holder of a NIF number) cannot purchase more than the above amounts each day. They may however make various acquisitions across different days.
- c)Terms of Access – Investors require:
- A bank account (DO account) in one of the BODIVA member banks;
- An asset account (Custody Account) in one of the BODIVA member banks;
- NIF – Angolan taxation number;
- A valid personal email.
- d)Custody Account – one of the fundamental aspects to carrying out transactions through the Website is that Investors first open a Custody Account with their bank.
- This Account is necessary for the registration and holding of the bonds acquired through the Website and may be used for any purchases or sales on BODIVA regulated asset markets;
- This is always associated with the DO account in the Bank to enable the receipt, on credit, of the interest, earnings and reimbursements of the bonds held in the portfolio;
- Only BODIVA Member Banks – the case of BANCO ECONÓMICO – are authorised to open these accounts for their clients through the signing of the respective contract and the attribution of a Custody Account number;
- The Website validates this through the IBAN bank number. Whenever the Investor does not have an open Account with a Settling Member, the Website issues a warning stating that investors should visit their Bank and open an account.
- e)Procedures – for the acquisition of public debt bonds through the Website, Investors need to complete the following steps:
- Following the opening of a Custody Account, Investors access the website and simulate their purchase request.
- At the end of the simulation – whenever duly validated – investors receive an email with a reference code for paying through the ATM network.
- Investors then have four hours to advance with the subscription payment for the bonds which requires the Multicaixa card linked with the NIB bank account number for the DO account associated with the Custody Account.
- The client may only pay with the Multicaixa card from the bank previously selected for undertaking such operations. Whenever holding more than one DO account, investors have to use the account card associated with the Custody Account.
- Whenever the payment takes place within the stipulated timeframe, the purchase is completed and settled on the same day (D), as detailed below:
BNA – makes the physical and financial settlement of the bond purchase;
BODIVA (through its Central Bond Office – CEVAMA) – places the bonds in Investor accounts;
BODIVA (by the close of the day) - informs the Settling Member (Bank) holding the investor’s Custody Account of the completed operation.
f)Public Bond Investment Benefits and Risks:
- Investment in public debt instruments issued by the Republic of Angola is considered a low level risk (Sovereign debt risk) given that the revenues of the Angolan state pay for the servicing of the debt, including the payment of interest (in accordance with the characteristics of the respective issues) and the capital invested on the date of maturity.
- The bonds acquired through the Website, in the primary market (at their issuing), are accepted for trading on BODIVA Regulated Markets and may be traded on this market (secondary market) through trading orders submitted by Investors to the Bank holding their Custody Account through to their maturity.
- However, the low level of liquidity on the secondary market may reflect in Liquidity Risk with potential difficulties encountered in disposing of the instruments acquired in terms of speed and price and potentially resulting in losses to Investors.
- This comes in addition to the Operational Risk resulting from the potential difficulties in implementing trading orders and other financial instrument services, especially due to reasons of a technological nature, system failures, delays, errors and inaccuracies in relation to the normal service quality standards of BODIVA or its Trading and Settling Members.
- Finally, we would draw attention to the Systemic Risk that may impact on the performance of financial and capital markets on a global scale. In summary, the organisation of the world financial system is based on confidence. The bankruptcy of one company – especially a financial institution - or a settlement system or another event of a catastrophic nature, may result in a 'domino effect", generating a crisis in confidence. In extreme conditions, the systemic risk may significantly alter the usual liquidity conditions prevailing for financial instruments and/or drastically boost market volatility, thus destroying the regular patterns of price formation.