Mozambique relieved over rejigged Eurobond

Mozambique’s agreement with the bulk of its creditors to restructure a $726.5m Eurobond has good terms and conditions and was “a relief for the budget”, finance minister Adriano Maleiane said on Thursday.

Mozambique, which has missed several repayments, said on Tuesday it struck an agreement with the bulk of its creditors to restructure the Eurobond, including extending maturities and sharing future revenue from offshore gas projects.

Under the deal, Mozambique would issue a new $900m Eurobond maturing in 2033, with a coupon of 5.875% just more than half what the current outstanding bond was designed to pay in interest.

“It’s a relief for the budget until the time we get additional revenue,” Maleiane told a business conference in Maputo.

Speaking to Reuters on the sidelines, the minister said, “The commercial terms we reached with the four members of bondholders... I think it’s good terms and conditions.”

The four creditors who had agreed in principle to the restructuring controlled around 60% of the 2023 bond. Support from creditors holding 75% of the bond will be needed to activate collective action clauses.

Maleiane could not comment on whether he was confident he would get the support needed.

“I can’t say anything on behalf the fifth group, but I think they are now interacting and digesting the proposal and will come up with something before or at the meeting we have to convene in the first quarter of 2019.”

Maleiane also said the country was still in discussion with creditors over a $535m loan to Mozambique Asset Management (MAM) and a $622m facility for ProIndicus, a state-owned maritime security company.

“We haven’t reached any agreement on the kind of instruments or time frames,” he said referring to talks over restructuring the two loans.

A group of syndicated loan members who lent money to ProIndicus are looking for a similar restructuring deal that has been agreed with Eurobond holders, a spokesperson for the lenders said on Wednesday.

Maleiane reiterated that it is a priority for markets to trust Mozambique, which has been battling to recover from a debt crisis, two years after it acknowledged $1.4bn of previously undisclosed lending.

The disclosure prompted the IMF and foreign donors to cut off support to Mozambique, triggering a currency collapse and a default on sovereign debt.

“We are still to analyse the terms,” Ari Aisen, the IMF’s resident representative in Mozambique told the Maputo business conference, referring to the restructured Eurobond.

“We are going to continue supporting Mozambique in pursuit of good governance, transparency and accountability, which are part of a framework required for a stable macroeconomic environment.” /

THE IMF IS GOING TO CONTINUE SUPPORT FOR MOZAMBIQUE IN PURSUIT OF GOOD GOVERNANCE, TRANSPARENCY AND ACCOUNTABILITY