FILE PHOTO: A fisherman cleans his boat beneath Maputo's skyline

INTERNATIONAL – Mozambique has reached an agreement with creditors to restructure a $726.5 million 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 $1.4 billion of previously undisclosed lending, much of which was supposed to be spent on a tuna fishing fleet.

The disclosure prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a debt default.

Mozambique has since missed bond repayments.

The finance ministry said the proposed restructuring would see bondholders receive new paper maturing in 2033, with principal repayments beginning in 2029.

The new bonds will have a face value of $900 million with a coupon of 5.875 percent, the finance ministry said.

Creditors would also receive 5 percent of future fiscal revenues from the Area 1 and Area 4 natural gas projects. The payments from gas revenues would be capped at $500 million a year but could still be a boon for bondholders.

Mozambique’s Rovuma Basin boasts gas resources of around 180 trillion cubic feet, enough to underpin massive liquefied natural gas export plants under development by global energy firms including Exxon Mobil, Anadarko and Eni.

Mozambique said the four creditors who had agreed to the restructuring control around 60 percent of the 2023 bond.

Bondholders made a restructuring proposal to Mozambique in August after rejecting an earlier offer from the government.

Credit Suisse and Russian lender VTB were key organisers of lending to Mozambique, receiving almost $200 million in fees, according to an independent audit.