Mozambique’s private creditors face substantial losses from the government defaulting on its debt, ratings agency Moody’s said in a report published on Tuesday.
Moody’s added in the report on the southern African country’s creditworthiness that government attempts at debt restructuring would likely extend beyond 2018 and that Mozambique’s fiscal strength was very low.
Mozambique admitted in 2016 to $1.4 billion of previously undisclosed loans, many of which went on upgrading maritime and military security.
The disclosure prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a debt default.
In March, the Mozambican government outlined three scenarios to overhaul its debt burden but Eurobond creditors rejected them, baulking at a second writedown in as many years.
Moody’s rates Mozambique’s long-term foreign-currency debt at ‘Caa3’, deep into sub-investment grade.