Mozambique has given investors further details into $1.16 billion of external debts it admitted to hiding earlier this year, which played a major role in leading to an October announcement that it couldn’t afford payments on foreign loans in 2017.
A $622 million loan that state-owned ProIndicus contracted matures in March 2021, with a $119.4 million amortization payment due in March next year, the government said in a statement posted on the Ministry of Economy and Finance website Monday. For the $535 million Mozambique Asset Management debt, the Southern African nation is already in arrears of $175.5 million, with a further payment of $133.8 million due in May, according to the statement. Both have government guarantees.
Credit Suisse AG’s London unit arranged the ProIndicus loan and Palomar Capital Advisors Ltd., based in Zurich, and Russia’s VTB Capital Plc arranged the MAM debt. London-based Clifford Chance LLP and Maputo-based Couto, Graca e Associados, Lda. were the legal advisers to the arrangers for both loans, according to the statement.
Mozambique said last month it couldn’t afford to repay the loans as it awaited revenues from large off-shore gas discoveries, and that it is seeking to restructure the debts along with a $727 million Eurobond due January 2023 by the end of the year. A group of Eurobond investors say they won’t start negotiations with authorities until an audit into the loans is published and the government nears a deal with the International Monetary Fund for an aid package.
The southeast African nation’s Eurobonds, which fell to a record low of 56.16 cents on the dollar on Oct. 31, were trading at 66.03 cents by 4:02 p.m. in London.
The IMF suspended funding to Mozambique in April after it found out about the MAM and ProIndicus debt. Government hopes to restructure its commercial foreign debt to allow it to agree on a deal to resume IMF aid by early next year. Government might default on a $60 million interest payment on the Eurobond due in January if restructuring talks don’t progress before then.
Kroll Inc. is conducting an audit on behalf of government into the MAM and ProIndicus debt, as well as the Eurobond, and is due to complete the probe by early February, which is a condition for the IMF to resume aid.