africa Banking Economy Finance Government Mozambique

Mozambique wants to void $622 million Credit Suisse loan

Mozambique wants the guarantee it provided for a $622 million loan arranged by Credit Suisse Group AG for state-owned ProIndicus canceled, as fallout from the southern African nation’s hidden-debt scandal spreads.

In a London lawsuit, the authorities are also calling for Credit Suisse and other defendants to contribute to the repayment of a related $535 million loan taken out by state-owned Mozambique Asset Management, according to a statement emailed by the attorney general Friday from the capital, Maputo. They’re want compensation from the defendants too, it said.

Credit Suisse has yet to receive the claim and will respond in court once it does, the lender said. It had no involvement in the MAM loan, it said in an email. Credit Suisse was the lead arranger for the ProIndicus debt, as well as an $850 million loan for a tuna fishing-boat fleet that was later converted into a Eurobond.

The court action relates to $1.2 billion of loans the government raised in 2013 and 2014 and then hid from the International Monetary Fund and other donors. That led to a financing freeze in 2016, when the debt was uncovered. The government has missed payments on the credits, as well as its $727 million in Eurobonds, since early 2017, as it sought to restructure them. In total, Mozambique guaranteed three loans for the projects amounting to $2 billion.

The $727 million Eurobonds fell 0.4 percent on Friday to 86.89 cents on the dollar, the lowest since November.

Several Arrests

Former Finance Minister Manuel Chang, who presided over the acquisition of the debt, has been arrested along with three ex-Credit Suisse employees, ex-Privinvest Group salesman Jean Boustani, and the son of a former Mozambican president.

In December, the U.S. Department of Justice accused the former Credit Suisse workers, some government officials and others of creating the maritime projects the debt funded as a front to enrich themselves. They diverted at least $200 million of the financing to pay bribes and kickbacks, according to a DOJ indictment.

Credit Suisse said in January the three former workers — former managing directors Andrew Pearse and Surjan Singh, and Detelina Subeva, a vice president in the global financing unit — deceived the bank.

In November, a group of holders of Mozambique’s Eurobond and the government reached an agreement in principal to restructure the notes. The attorney general’s statement doesn’t mention this loan. The Finance Ministry hasn’t responded to emails asking whether the Eurobond restructuring will proceed as planned. VTB Capital, the Russian lender that arranged the MAM debt, isn’t named as a defendant in Mozambique’s claim in London.

In November, a Credit Suisse spokesman — speaking on behalf of the ProIndicus loan-syndicate working group that represents 86 percent of the outstanding debt — said the bank would seek a similar restructuring deal to the Eurobond holders.

The Mozambican attorney general filed the lawsuit earlier this week.

Source: Bloomberg

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