Bloomberg/Andrey Rudakov

Economy

Mozambique nears debt-restructuring deal with VTB

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The International Monetary Fund (IMF) said that talks between Mozambique and VTB on the lender’s $535 million loan to state-owned Mozambique Asset Management (MAM) are nearly finalised with an agreement in principle reached.

Sunday 12, May 2019

(Bloomberg) -- The IMF said that Mozambique reached an agreement in principle with Russia’s VTB Bank on the restructuring of a loan that forms part of the nation’s $2 billion hidden-debt scandal.

The Southeast African nation has sought to restructure the loans since 2016, when the government admitted to the IMF it had contracted the bulk of them in secret, breaching an obligation to notify the Washington-based lender of any new credits.

The US Department of Justice and the Mozambican authorities are investigating the loans.

 “The new restructuring terms would provide significant debt-service relief and staff assess that there is a good prospect of these discussions concluding as envisaged,” says the IMF.

Mozambique in November reached a restructuring agreement with the majority of holders of its $727 million of euro bonds, which stemmed from the same $2 billion project as MAM.

Under that deal, holders would get a new $900 million Eurobond maturing in 2033, as well as five per cent of revenue from natural-gas projects companies including Exxon Mobil and Anadarko, are developing off Mozambique’s coast.

Mozambique filed a case in London seeking to cancel a government guarantee for one of the three loans that comprise the $2 billion of debt, citing allegations of bribery and kickbacks in the contraction of the debt.

 Credit Suisse was the lead arranger for that $622 million loan to state-owned ProIndicus and the Swiss lender has denied any wrongdoing.

Striking restructuring deals for the MAM loan and Eurobond holders, while cancelling the ProIndicus debt, would mark a significant step in opening the way for Mozambique to re-enter global capital markets.

Empresa Nacional de Hidrocarbonetos, the state-owned energy company, plans to raise billions of dollars in loans to pay for its share of financing the natural-gas projects being developed along Mozambique’s northern coastline.

 

TAGS : VTB Bank, MAM, Empresa Nacional de Hidrocarbonetos, ProIndicus debt, Credit Suisse, US Department of Justice indictment, IMF

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