INTERNATIONAL – Mozambique has reached an agreement with the bulk of its creditors to restructure a $726.5 million (R10 billion) Eurobond, including extending maturities and sharing future revenues from huge offshore gas projects, the finance ministry said on Tuesday.
Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4bn of previously undisclosed lending, much of which was supposed to be spent on a tuna fishing fleet.
The disclosure prompted the International Monetary Fund (IMF) and foreign donors to cut off support triggering a currency collapse and a default on sovereign debt.
Under the deal, Mozambique would issue a new $900m Eurobond maturing in 2033 with a coupon of 5.875 percent – just more than half what the current outstanding bond was designed to pay in interest.
Principal repayments of the bond, roughly equating to the outstanding sum plus just more than $180m in unpaid interest, would begin in 2029.
Through a separate instrument, creditors would also receive 5 percent of future fiscal revenues from the Area 1 and Area 4 natural gas projects, though payments would be capped at $500m.
A bondholder close to the situation said the plan would provide Mozambique with cash flow relief of about 85 percent.
“It is a good deal, there are no winners or losers here. All the parties wanted to define a package that is fit for the reality in Mozambique, finding a robust structure with low probability of default in the future and that will mirror the cash flows,” the investor told Reuters.
Mozambique’s Rovuma Basin boasts natural gas resources of around 180 trillion cubic feet, enough to underpin massive liquefied gas export plants under development by global energy firms including Exxon Mobil, Anadarko and Eni.
Eurobond holders had pushed for an instrument linked to the expected gas windfall, a demand Maputo had previously rejected.