Intelligent news from Mozambique

Mozambique ‘tuna bond’ scandal almost twice as big as thought – WSJ


Mozambique is in almost twice as much debt from deals to buy military patrol boats as investors had been led to believe, according to a report in the Wall Street Journal (WSJ). The shareholders behind the controversial tuna fishing company EMATUM borrowed an additional $622 million for maritime defence in 2013 through a separate state-owned company, the paper revealed.

A document released by Credit Suisse and VTB on 24 March, in relation to their restructuring of almost $700 million in bonds to finance the controversial EMATUM deal, revealed a further $700 million in government borrowing that could jeopardise the deal – as Zitamar News reported last week. A sovereign downgrade by S&P meant the lenders of that money could demand immediate payment, the banks said.

According to WSJ, that extra money was also lent by Credit Suisse and VTB for Mozambique’s defence spending, through a state-owned company called ProIndicus. This means Mozambique borrowed a total of $1.47 billion through the two banks in 2013, as opposed to the $850 million that caused a scandal at home and internationally.

The WSJ quoted an anonymous source who said ProIndicus borrowed $622 million to fund the purchase of navy ships and radar installations to protect against piracy. Africa Confidential has previously reported that ProIndicus is owned by Mozambique’s defence ministry and the secret services, known as SISE. SISE is also a shareholder in EMATUM.

Unless they are also restructured, the ProIndicus loans are scheduled to be fully repaid by 2021, the WSJ said, two years before the new bonds with which Mozambique has restructured the EMATUM loan will come due.

On 1 April, Credit Suisse and VTB convened a meeting of EMATUM bondholders at which around 86% voted in favour of the swap deal. The new deal converts the remaining $697 million of outstanding EMATUM bonds – which should have been paid off by 2020 in six-monthly instalments of over $100 million – into new bonds which pay interest only until 2023, when they will have to be repaid in full or – most likely – refinanced.

Despite shareholder approval, ratings agency S&P said the exchange offer is “tantamount to default”, and downgraded Mozambique’s sovereign debt rating accordingly.

© 2016, Zitamar Ltd. Reproduction and dissemination prohibited without written permission.



  1. So how is the $622million Proindicus loan secured? Another sovereign guarantee?

    The issue of the ‘EMATUM’ patrol boats is looking a bit odd – the first Ocean Eagle trimaran was launched more than a year ago but hasn’t yet been delivered. Of the six 32m high speed interceptors, three were delivered to Pemba in early February. Where are the others?


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  5. re the question, the answer is, of course its a sov guarantee
    otherwise the banks would not have lent
    possibly, there is collateral

    the restructure of the Ematum Bonds now got the bank loans in a earlier repay-position, which they apparently never had before.

    this is a clear element of conflict on the side of banks

  6. Appears to be extraordinarily precarious. With early repay of the bank loans, the government would be back in the situation that it was trying to avoid.

    Amazing that there can be a sovereign guarantee of this size without the knowledge of the Central Bank, and no form of parliamentary debate.

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