Mozambique tuna-bond company is probed by Attorney-General

Login

Register

http://www.clubofmozambique.com/

Mozambique tuna-bond company is probed by Attorney-General

7:08 CAT | 22 Jun 2016

Mozambique’s judiciary said it’s investigating Empresa Mocambicana de Atum SA, the state-owned tuna-fishing company whose $850 million of bonds was converted into sovereign debt in April.

The investigation was initiated because of reports about “possible illegalities in the constitution, financing and operation of that unit by the state,” Attorney-General Beatriz Buchilli told lawmakers Wednesday in the capital, Maputo.

Ematum, as the company is known, was established in August 2013. Credit Suisse Group AG and VTB Capital Plc financed its purchase of tuna boats, then packaged the debt into bonds that they sold to investors. Two months ago, about 85 percent of investors agreed to swap their holdings for sovereign notes after the cash-strapped government sought to extend the repayment period and lower interest payments.

Mozambique, one of the world’s poorest countries, is struggling to pay its debt after a commodity slump reduced its export revenue and the depreciation of the metical boosted the payment costs in dollars. The government in April owned up to the existence of $1.4 billion of previously undisclosed borrowing, including loans by state-owned Mozambique Asset Management, or MAM, and Proindicus.

Missed Payment

Last month, MAM missed a May 23 deadline to make a $178 million interest payment on its $535 million loan. Donors including former colonizer Portugal, the International Monetary Fund and the World Bank have subsequently frozen funding and demanded the nation make full disclosure on all its debts and obligations. S&P Global Ratings on May 28 lowered Mozambique’s credit assessment to CCC from B. Moody’s Investors Service views the country as already in default.

The government has vacillated on repaying the debts of the state-owned companies. On May 24, an official said the state is unwilling to convert the loan extended to MAM into sovereign debt. Earlier this month, Prime Minister Carlos do Rosario said that while it appeared “attractive” to default on some payments, the country risked damaging its “good image” with foreign creditors if it failed to honor its guarantees.

An IMF team is in the country until June 24 to assess the state of the $16-billion economy and the extent of its debt crisis.

Source: Bloomnerg