Regulatory Alerts2020-05-11
Instruction No. 09/2020 of May 11 – Monetary Policy: Treasury Bond Purchase Line Established by Instruction No. 06/2020 of April 6
The Bank of Angola issued Instruction No. 09/2020 to grant large productive-sector companies access to a Kz 100 billion Treasury Bond Purchase Line established by Instruction No. 06/2020, enabling them to discount held Non-Adjustable Treasury Bonds (NTBs) for short-term liquidity. Eligible companies must prioritize using the sale proceeds to settle matured taxes, social security contributions, bank loans, and national supplier debts, with transactions processed sequentially at commercial banks until the line is exhausted or July 6, 2020. The instruction mandates a maximum Kz 5 billion per company, an 18% minimum yield to maturity, a 0.1% financial intermediary commission, and strict operational timelines for bank verification, BODIVA platform registration, and D+1 physical/financial settlement.
INSTRUCTION NO. 09/2020 of May 11 SUBJECT: MONETARY POLICY − Treasury Bond Purchase Line Established By Instruction No. 06/2020 of April 6 Considering the interest demonstrated by large-sized companies in the productive sector in discounting Treasury Bonds they hold in order to generate liquidity to meet their short-term obligations, the Bank of Angola has decided to grant them access to the Treasury Bond Purchase Line implemented through Instruction No. 06/2020 of April 6; Thus, under Article 22 of Law 16/10 of July 15, the Bank of Angola Law, and in the exercise of the competence conferred upon me by Article 40 of said Law. I DETERMINE:
- Treasury Bond Purchase Line 1.1. Large-sized companies with activities in the productive sector may access the line established through Instruction No. 06/2020 of April 6, which provides for the purchase of Non-Adjustable Treasury Bonds by the Bank of Angola. 1.2. The terms and conditions applicable to the use of the line by large-sized companies are defined in ANNEX I of this Instruction, which forms an integral part hereof. 1.3. Requests received under Instruction No. 06/2020 and this present Instruction must be processed in the order of receipt at Commercial Banks, until the Line is exhausted or its validity period expires.
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 2 of 7 2. Doubts and Omissions Doubts and omissions arising from the interpretation of this Instruction are clarified by the Asset Markets Department of the Bank of Angola. 3. Sanctions Violation of the provisions set forth in this Instruction subjects Commercial Banks to penalties, under Law 12/2015 of June 17, the Framework Law on Financial Institutions. 4. Validity Period This Instruction remains valid until July 6, 2020, or until the limit of the Treasury Bond Purchase Line is exhausted, with the period being extendable by the Bank of Angola, under the terms defined in ANNEX I of this Instruction, which forms an integral part hereof. 5. Entry into Force This Instruction enters into force on the date of its publication. PUBLISHED. Luanda, May 11, 2020. THE GOVERNOR JOSÉ DE LIMA MASSANO
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 3 of 7 ANNEX I Treasury Bond Purchase Line for Large Non-Financial Companies in the Productive Sector Technical Sheet - Terms & Conditions Amount Up to the available value under the Line of Kz 100 Billion established through Instruction No. 6/2020 of April 6 Purpose Purchase of Non-Adjustable Treasury Bonds (NTBs) with the objective of generating liquidity for companies. Companies must apply the proceeds from the sale of NTBs to the payment of any obligations arising in the normal course of their activities, and must, meanwhile, prioritize the payment of matured debts that include the following types: − Taxes; − Social Security Contributions; − Bank Loans; − National Suppliers Line Utilization Period The Line will be available until: − July 6, 2020; − Full utilization of the available amount. The Bank of Angola may extend the utilization period, if justified. Eligible Companies Large-sized national companies: − With activities in the productive sector; − That remain operational; − With treasury needs to meet their obligations in the current year; − Holders of eligible NTBs.
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 4 of 7 Eligible Securities Non-Adjustable Treasury Bonds − Year of issuance: 2019 or 2020; − Maximum remaining maturity: 4 years; − That have not been pledged as collateral for a loan granted by a Bank. Maximum Amount per Company Kz 5 billion. Trading Conditions The Bank of Angola will acquire the NTBs accepting a minimum yield to maturity of 18% (eighteen percent) Line Operationalization Procedures
- Companies must inform their Commercial Bank, which holds custody of the relevant securities, regarding: a) Their interest in selling their NTBs under the trading conditions stated above; b) The identification of creditors, matured amounts, and bank details for each, in cases where there are matured debts of the types specified above, aiming at their automatic settlement upon receipt of the proceeds from the sale of NTBs.
- To this end, companies must submit the information to their Commercial Bank in the format of ANNEX II to this Instruction.
- Commercial Banks must: a) Verify that the company and the NTBs it intends to sell meet the eligibility criteria stated above; b) Within 1 business day of receiving the customer's expression of interest, and after verifying its eligibility, send information to the Bank of Angola that allows verification of compliance with eligibility requirements.
- The Bank of Angola evaluates the request and responds to the Commercial Bank regarding its acceptance or rejection of the purchase of the securities and confirms the amount to be paid.
- The Commercial Bank confirms the purchase conditions to the client and registers the transaction on the BODIVA trading platform, within two business days. After registration of the transaction, the Bank of Angola proceeds to confirm the terms (price and quantity) through the trading platform of
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 5 of 7 BODIVA. Physical and financial settlement will occur on the D+1 cycle (next business day). 6. The Commercial Bank, immediately after crediting its client's account, settles the matured debts previously reported by the client, when applicable. 7. Commercial Banks are prohibited from charging other fees to their clients beyond the financial intermediary commission defined below and, when applicable, the commissions established in their fee schedules for bank transfers, in making payments to the creditors of their clients.
Financial Intermediation Commission 0.1% (Zero point one percent), paid by the client to the Commercial Bank Information The Bank of Angola will inform Commercial Banks and the market in the event that: − Full utilization of the Line occurs before July 5; − A decision is made to extend the utilization period, or to increase the Line amount. Clarification of Doubts Asset Markets Department: dma@bna.ao
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 6 of 7 ANNEX II Treasury Bond Purchase Line for Large Non-Financial Companies Client Request Form
- NTBs Intended for Sale Issuance Date of Issuance Maturity Date Value Interest Rate Total NTBs to Sell
- Matured Debts Intended for Payment a. Taxes Payment Information Value b. Social Security Payment Information Value c. Bank Loans Bank IBAN Value d. National Suppliers Name IBAN Value Bank Total Matured Debts to Settle Company Name Activity Sector Bank Account No. Tax Identification Number (TIN) Number of Employees Dec. 2019 Gross Revenue - fiscal year 2019
CONTINUATION OF INSTRUCTION NO. 09/2020 Page 7 of 7 ANNEX II (Cont.) We request the sale of NTBs held by our company, and confirm our acceptance of the terms and conditions defined in the Technical Sheet - Treasury Bond Purchase Line for large non-financial companies.