The 3-year Obrigacao do Tesouro Nao Reajustavel (OTNR) is a key inflection point on Angola’s domestic yield curve. At a nominal yield of approximately 20.5%, it offers a modest step-up over the 2-year OTNR – but the real distinction lies in its tax treatment: the 3-year tenor crosses the threshold that qualifies for the reduced 10% Imposto sobre a Aplicacao de Capitais (IAC) rate, making it materially more attractive on an after-tax basis.
| Indicator | Value | Change |
|---|---|---|
| Current Yield | ~20.5% | — |
| BNA Policy Rate | 17.5% | — |
| Coupon Frequency | Semi-annual | — |
| Inflation (YoY) | ~15.7% | — |
| Minimum Investment | AOA 1,000 | — |
| IAC Tax Rate | 10% | — |
How the 3-Year OTNR Works
The 3-year OTNR is a fixed-rate, Kwanza-denominated sovereign bond. The coupon is set at issuance – currently around 20.5% annualized – and does not adjust for inflation or exchange-rate movements during the life of the bond. Semi-annual coupons (cupao semestral) of approximately 10.25% of face value are paid every six months, with full principal redemption at maturity.
The Ministerio das Financas issues 3-year OTNRs through competitive auctions via the BNA. Authorized primary dealers (operadores de mercado primario) submit yield-based bids; the BNA fills from lowest yield upward. Non-competitive bids are filled at the weighted-average yield. Settlement is T+2 through BODIVA’s clearing infrastructure, and all bonds are held in dematerialized book-entry form at the Central de Valores Mobiliarios. The minimum investment is AOA 1,000.
Current Market Context
The BNA policy rate stands at 17.5%, and headline inflation is approximately 15.7% (Instituto Nacional de Estatistica). At a gross yield of 20.5%, the 3-year OTNR offers a nominal spread of 300 basis points above the policy rate. After the 10% IAC withholding, the net yield is roughly 18.5% – comfortably above inflation and meaningfully better on an after-tax basis than the 2-year OTNR, which yields about 20.0% gross but is taxed at 15%, producing a net yield of only about 17.0%.
This tax wedge makes the 3-year the most efficient tenor for investors seeking the best risk-adjusted, after-tax return in the OTNR complex. The additional year of duration relative to the 2-year is modest, while the 5-percentage-point IAC reduction has a significant compounding effect over six coupon payments.
Who Should Buy
The 3-year OTNR is well-suited for institutional investors – pension funds, insurance companies, and banks – that need to match medium-term Kwanza liabilities and want to maximize after-tax income. It is also an attractive option for retail investors with a three-year investment horizon who can benefit from the preferential tax rate.
Investors with shorter horizons or higher liquidity needs should consider treasury bills or the 2-year OTNR. Those willing to commit for five years or longer can explore the 5-year and 7-year tenors, which offer incrementally higher yields at the same 10% IAC rate but carry greater duration risk.
Tax Treatment
The Imposto sobre a Aplicacao de Capitais (IAC) applies at the preferential rate of 10% on coupon income for the 3-year OTNR. This reduced rate is available because the bond’s original maturity exceeds three years – the statutory threshold set by Angolan tax law. Tax is withheld at source on each semi-annual coupon payment. The 5-percentage-point difference relative to the 15% rate on shorter instruments can amount to a substantial cumulative benefit over the six coupon payments received during the bond’s life.
Comparison to Alternatives
| Feature | 2-Year OTNR | 3-Year OTNR | 5-Year OTNR | 364-Day BT |
|---|---|---|---|---|
| Gross Yield | ~20.0% | ~20.5% | ~21.0% | ~17.0% |
| Net Yield (after IAC) | ~17.0% | ~18.5% | ~18.9% | ~14.5% |
| IAC Tax Rate | 15% | 10% | 10% | 15% |
| Duration Risk | Moderate | Moderate-high | High | Low |
The 3-year OTNR’s after-tax advantage over the 2-year is roughly 150 basis points on a net yield basis, despite only 50 basis points of gross yield difference. This makes it the clear winner for tax-sensitive investors comparing the two tenors. Against FX-indexed OTX bonds, the 3-year OTNR offers a higher nominal yield but no protection against Kwanza depreciation.
How to Buy
- Primary auction – Place competitive or non-competitive bids through an authorized primary dealer during the BNA auction window. Scheduled dates appear in the quarterly calendario de emissoes.
- Portal do Investidor – BODIVA’s online platform enables registered retail investors to submit non-competitive bids for new issuances and to access secondary-market trading.
- Secondary market via BODIVA – Outstanding 3-year OTNRs trade on the mercado secundario. Liquidity is generally solid for recently issued benchmark series.
A securities account (conta de titulos) at an authorized custodian and a valid Numero de Identificacao Fiscal (NIF) are required for participation.