Mozambique must negotiate IMF aid before returning to markets – S&P

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Mozambique must negotiate IMF aid before returning to markets – S&P

3:01 CAT | 03 Apr 2017

Rating agency Standard & Poor`s says that the Mozambican government should negotiate an IMF aid package before issuing debt in international financial markets again.

“We do not expect Mozambique to issue debt in the international markets in 2017 because of its recent financial default,” the rating agency writes in an analytical note on the sub-Saharan African financial market.

The report, sent to investors and to which Lusa has access, says: “We believe the country will try to negotiate a program with the IMF first.”

In January, Mozambique failed to pay the first instalment of almost US$60 million on public debt of US$727.5 million issued in April last year, including commoditised state -guaranteed Mozambican Tuna Company debt.

“In January 2017, Mozambique went into financial default on this Eurobond. The country has the highest percentage of public debt in foreign currency – 85 percent of total debt,” S & P analysts note, adding that last year only Mozambique and the Republic of Congo went into default.

“In 2016, both the Republic of Congo and Mozambique entered into financial default,” but the significant difference is that Brazaville failed to pay in August “for only a few days”, while Mozambique not only did not pay but officially served notice of its inability to pay do so, admitting that it would be “very difficult” to service its debts this year.

This year, S & P says, “the issue of foreign currency debt may prove even more challenging because of the macroeconomic conditions facing many sub-Saharan African countries, with lower commodity prices and the projected increase in interest rates in advanced countries obliging African issuers to offer higher interest rates too”.

Source: Lusa