Mozambique May Reject Eurobond Restructuring Plan, Exotix Says

MAPUTO (Capital Markets in Africa) – Mozambique might reject a debt proposal from a key group of holders of the southeast African nation’s Eurobonds as the plan excludes two other loans the government wants to restructure, Exotix Capital said.

The so-called Global Group of Mozambique’s Bondholders last week presented a counter-proposal to Mozambique that provided nearly $1 billion of cash-flow relief until 2023, when the $727 million Eurobond falls due. The plan would also provide the investors with access to as much as 3 percent of government revenue anticipated from natural-gas deposits being developed in the country. It doesn’t reference the two other loans Mozambique has been seeking to restructure since 2016.

“This in itself is a significant departure from the government’s position and may be enough for the government to reject it,” Stuart Culverhouse, head of fixed-income research at Exotix in London, said in a note. “Conversely, the government might argue that including the loans on the same terms might not be affordable.”

The government has said it will seek “inter-creditor equity” on the three loans totaling about $2 billion it is seeking to restructure. Mozambique had in March proposed writing off 50 percent of past due interest, while offering debt holders a choice of three instruments with varying new maturities, coupons and haircuts.

Mozambique has missed payments on the Eurobonds and the two other loans for a maritime-security project and ship-repair yards since announcing the restructuring in October 2016.

Source: Bloomberg Business News