Mozambique's Bondholders Eyeing Gas Riches Back Exchange Offer
- Biggest investor in so-called tuna bonds backs restructure
- Bondholders will vote on the exchange offer April 1 in London
Some of the biggest holders of Mozambique’s debt support an offer to exchange securities issued by a state-owned tuna-fishing company for longer-maturity sovereign bonds, betting the southeast African country’s gas riches will earn it enough cash in coming years to repay the debt.
The Mozambican government on Thursday proposed giving investors interest-only government bonds maturing in January 2023 in exchange for $697 million of amortizing notes due September 2020 issued by Empresa Mocambicana de Atum SA, or Ematum. While the coupon on the new debt will be 10.5 percent, up from 6.305 percent, the exchange will mean the country won’t have to make regular principal repayments, lowering its annual debt-service costs. The government believes that by 2023 it will have bolstered its finances through the development of recently discovered gas fields, which may turn it into the third-biggest liquefied natural gas exporter. Some investors agree.