Grey List – Mozambique tackles financial crimes training initiative
Reuters (File photo) / VTB offices in London
The Russian VTB bank on Friday accused Mozambican bondholders of “misconstruing the findings” of the debt report, noting that the public company loans “remain legal and binding”.
“The group of Mozambican public debt holders [has] misconstrued the conclusions of the parliamentary committee and the Kroll report,” the Russian bank said in a note sent by e-mail to Bloomberg.
The Russian bank, along with Credit Suisse, was involved in arranging the US$535 million (EUR 468 million) undisclosed loan taken on by Mozambique Asset Management (MAM) and the US$ 622 million (EUR 544 million) taken on by Proindicus.
“The loans to Proindicus and MAM were recognized as public debt and the issued guarantees remain legal and binding obligations of the state,” the bank argues in response to the proposal put forward on Thursday by the group of bondholders.
Holders of Mozambique’s debt securities say that that the government is not obliged to repay the loans made to public companies MAM and Proindicus, thereby saving the country US$850 million (EUR 744 million).
The group, which owns more than 70 percent of Mozambican public debt issued following the conversion of the obligations of the Mozambican Tuna Company (Ematum), says that the findings of Kroll audit, the Mozambican parliamentary commission and the administrative court exempt the government from paying the loans’ state guarantees.
“Rejecting these guarantees and liquidating Proindicus, MAM and Ematum is the proper restructuring move to clean up the system, isolate the balance of payments from further liabilities and restore access to external financing,” creditors say in a statement quoted by Bloomberg.
The initiative would secure the Mozambican government extra financial capacity to service US$ 850 million of debt over the next five years, roughly the same amount posted in public debt securities last year.
The loss would be borne entirely by those who lent to public companies, leaving investors in sovereign debt securities more likely to have their financial commitments honoured.
The debtors’ group calculations were made on the basis of the Mozambican government’s October presentation to creditors, in which it explained its intention to restructure the debt and not to pay the instalments of the loans of the public companies.
The investors’ calculations also take into account recent developments in the improvement of exchange rates, the appreciation of the metical against the dollar, and the tax revenues from the Final Investment Decision of the oil company Eni, valued at 16 billion dollars over the next 25 years.
The position of the holders of Mozambique’s debt securities issued in March last year is the latest development since the disclosure on Saturday of the Kroll audit of debt contracted without notice to national institutions and international creditors, which led to the suspension of external financing and plunged Mozambique into an economic and financial crisis.
The holders of public debt securities have, since the beginning of the crisis, tried to mark a separation between them and the investors who put up money for the loans to the two public companies arranged by Credit Suisse and the VTB bank.
The Mozambican government, on the other hand, is seeking to aggregate all creditors, whether holders of company or public debt issued last year, and renegotiate the debt in its entirety.
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