Mozambique will miss an interest payment on dollar bonds this week because of its deteriorating fiscal position.
The government’s capacity to make debt payments is “extremely limited in 2017, and does not allow the republic room to make the scheduled interest payment on the notes,” the Ministry of Economy and Finance said in an e-mailed statement on Monday.
Mozambique is in talks with the International Monetary Fund about resuming support to the southern African nation after it was suspended in April because of undisclosed loans. The finance ministry told investors in October it needed to restructure its commercial debt.
An interest payment of $59.8 million would have been due on Jan. 18 for the $727 million bonds due January 2023. The bonds fell to 54.917 cents on the dollar by 10:58 a.m. in London, having a reached a record low of 50 cents last week.
A group of bondholders was expecting the government to make the coupon payment, Charles Blitzer, a Washington-based former IMF official who’s advising the group, said last week. Lazard and White & Case LLP are advising the government on the restructuring.