Intelligent news from Mozambique

Mozambique aims to have debt restructure proposal by end of March – report

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Mozambique is aiming to have a “concrete proposal” for its creditors by the end of March to start negotiations to restructure the country’s commercial foreign debt, Finance Minister Adriano Maleiane told newspaper O País on Monday, 27 February.

Mozambique is currently in arrears on three financing facilities – its $767m sovereign Eurobond, having defaulted on a $60m payment in January; a $535m guaranteed loan taken out by maritime security company MAM, which it failed to pay in May 2016; and a $622m guaranteed loan taken out by another maritime security company, ProIndicus, having failed to honour one of the creditors’ demands for early payment following a ratings downgrade in 2016.

Mozambique first asked its creditors to consider restructuring all three facilities in October 2016, aiming to conclude the restructure by the time the January payment on the sovereign bond was due – a deadline which has now passed.

The next payment is for $119m on ProIndicus, due on 21 March 2017. Zitamar News reported in January that if that payment is missed, it could cause chaos in Mozambique’s domestic banking system due to local banks having bought portions of the loan when it was syndicated by the arranging bank, Credit Suisse.

In an interview following the opening of the first session of parliament for 2017, Maleiane told O País that he “cannot foresee” what will happen, but said: “What we have to do is make an effort to conclude negotiations with the advisors by March, so that by then we can have a concrete proposal to be able to bring Mozambique’s debt to sustainable levels.”

Maleiane added that he also wants “to have this debt framed within the programme that we have for the 2017 budget.” The Minister is due to address a press conference on Wednesday, 1 March, regarding the 2017 budget and spending plans.

A committee representing some of the holders of the sovereign bond has said it will not negotiate with the government until the results of an independent audit into the three deals, being carried out by investigations company Kroll, is published. The report was initially due to be published by the end of February, but the deadline has now been pushed back to 31 March.

Mozambique’s Ministry of Finance is advised by investment bank Lazard Frères and by law firm White & Case.

© 2017, Zitamar Ltd. Reproduction and dissemination prohibited without written permission.

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1 Comment

  1. Roberto Tibana on

    Is he day-dreaming? By March to start discussing a debt restructuring plan with creditors? My bet is that they will be busy readying themselves for a good read of … the Report. Yes, the Kroll report on the debts that our day-dreamer said did not exist! No fast forward.

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