Angola vs Kenya — Government Bond Market Comparison
Angola and Kenya represent two distinct models of sub-Saharan African sovereign debt markets. Angola’s oil-dependent economy and concentrated banking sector contrast with Kenya’s more diversified economy and deeper capital markets. For frontier fixed income investors, understanding the trade-offs between these two markets is essential for portfolio allocation decisions.
Key Metrics Comparison
| Metric | Angola | Kenya |
|---|---|---|
| Sovereign rating (S&P) | B- | B |
| Policy rate | 17.5% (BNA) | ~10% (CBK) |
| Inflation | 15.7% | ~6-7% |
| Domestic bond yields (5yr) | ~20.5% | ~14-16% |
| Eurobond yields | 7-9% | 8-10% |
| Currency | AOA (USD/AOA 914.60) | KES |
| Debt-to-GDP | 59.9% | ~70% |
| Primary exchange | BODIVA | NSE |
| Key export dependency | Crude oil | Diversified (tea, horticulture, services) |
Yield Comparison
Angola offers significantly higher nominal yields on domestic instruments:
- Angola OTNR 5-year: ~20.5% vs Kenya 5-year bond: ~14-16%
- Yield advantage for Angola: approximately 400-600 basis points
However, adjusting for inflation reveals a narrower gap in real terms:
- Angola real yield (5yr): ~4.8% (20.5% minus 15.7% inflation)
- Kenya real yield (5yr): ~8-10% (14-16% minus ~6-7% inflation)
Kenya’s lower inflation means that despite lower nominal yields, Kenyan bonds may actually deliver higher real returns. This is a critical distinction for long-term investors focused on purchasing power preservation.
Credit Risk Comparison
Kenya carries a modestly higher sovereign rating (S&P B vs Angola’s B-), reflecting:
- Diversification advantage — Kenya’s economy is not dependent on a single commodity, reducing revenue volatility
- Institutional depth — Kenya’s capital markets are more developed, with a larger domestic investor base and the Nairobi Securities Exchange providing better secondary market liquidity
- IMF classification — Both countries face elevated debt distress risk, though Kenya’s diversified revenue base provides more policy flexibility
Angola’s oil dependency creates binary risk exposure: when Brent crude is strong (currently ~$74.50/bbl), Angola’s fiscal position is solid; when oil prices crash, debt metrics deteriorate rapidly.
Market Infrastructure and Accessibility
| Feature | Angola | Kenya |
|---|---|---|
| Secondary market liquidity | Limited (10,328 BODIVA transactions in 2024) | Moderate (NSE more active) |
| Foreign investor access | Aviso 15/19 framework; custodian required | More accessible; established foreign participation |
| Retail platform | Portal do Investidor | M-Akiba (mobile platform) |
| Settlement | CEVAMA | CDSC |
| FX convertibility | Managed; repatriation via BNA | More flexible; limited capital controls |
Kenya’s capital markets are generally more accessible to foreign investors, with a longer track record of non-resident participation and fewer operational barriers. Angola’s market offers higher yields but requires navigating the Aviso 15/19 framework and managing FX repatriation risk.
Currency Risk
Both currencies face depreciation pressures, but the risk profiles differ:
- Angolan Kwanza (AOA) — Tied to oil prices; managed float with BNA intervention. Depreciation risk rises when oil weakens. OTX USD-indexed bonds provide a domestic hedge.
- Kenyan Shilling (KES) — Driven by trade balance, remittances, and capital flows. More predictable depreciation path due to diversified FX inflows.
Investment Case Summary
| Factor | Favors Angola | Favors Kenya |
|---|---|---|
| Nominal yield | Higher domestic yields (18-22%) | — |
| Real yield | — | Higher after inflation adjustment |
| Credit quality | — | Modestly higher rating |
| Market access | — | Easier for foreign investors |
| Liquidity | — | Deeper secondary market |
| FX hedge available | OTX USD-indexed bonds | Limited domestic options |
| Upside catalyst | Oil price rally | Structural reform progress |
For the full Angola risk analysis and yield curve, see our dedicated pages. For other peer comparisons, see Angola vs Nigeria and Angola vs South Africa.