S&P boosts Mozambique

S&P said it boosted Mozambique’s foreign currency long-term rating to CCC+ from SD following the completion of a distressed-debt exchange on Oct. 30..

Mozambique exchanged $726 million of notes due 2023 with $900 million of notes due 2031. The 2023 notes had been in arrears and not serviced since January 2017. The new notes are fixed-rate amortizing notes maturing on Sept. 15, 2031, with eight equal amortizations starting in 2028. The notes have a step-up coupon starting at 5% per year and rising to 9% in 2024.

The exchange doesn’t get Mozambique out of the woods yet, S&P said.

“Despite the completion of the debt exchange, the Mozambique government still faces a high debt burden exceeding 100% of GDP and yet to be resolved litigations on debt owed by two non-financial public enterprises. Pending lawsuits relate to two external commercial loans, totaling close to $1.2 billion, extended to Mozambique asset management company (MAM) and Proindicus both government-owned enterprises, reportedly with government guarantees. Both loans and key individuals involved in executing the agreements are subject of legal cases in the U.S. and U.K.,” the agency said in a press release.

The outlook is stable.

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