Mozambique Meets Investors in London Over Tuna-Bond Restructure

  • Finance minister Maleiane leads delegation to London, New York
  • Government is trying to win bondholders' backing for exchange

Officials from Mozambique will meet investors in the U.K. and U.S. this week to try and win their backing for the restructuring of $697 million of bonds issued by a state-owned tuna-fishing company.

Minister of Economy and Finance Adriano Maleiane is leading the delegation, which will meet bondholders in London Monday and New York on Tuesday, Kevin Daly, a money manager at Aberdeen Asset Management Plc, which owns some of the securities, said in an e-mailed response to questions.

The south-east African nation said on March 9 it wanted to switch holders of state-guaranteed notes issued by Empresa Mocambicana de Atum SA, or Ematum, which are amortizing and have a final maturity of September 2020, into a new interest-only bond issued by the government maturing in 2023. Details of the exchange, including the coupon on the new bond, are expected to be announced on March 17.

Mozambique, one of the world’s poorest countries, wants to reduce its annual debt-service costs. It is facing a cash crunch thanks to a slump in commodity prices and a fall in the value of its currency, the metical, which has plunged 36 percent against the dollar since the start of 2015.

Yields on Ematum’s bonds fell 27 basis points to 16.35 percent by 11:56 a.m. in London, the lowest since Jan. 8, according to data compiled by Bloomberg. The bond has returned 10.7 percent this month as the yield dropped from a record of 22.47 percent on March 1. Emerging-market dollar Eurobonds have gained 1.5 percent on average this month.

The government is also trying to avoid a downgrade by credit-ratings companies. Fitch Ratings Ltd. said on March 11 that that the restructuring offer “could constitute a distressed debt exchange under the agency’s criteria, which we would consider a default event.”

Standard & Poor’s said last month it would regard any restructuring that included an extension of the maturity as tantamount to a default that may result in a downgrade of Mozambique’s rating of B-, six steps below investment grade. Fitch and Moody’s Investors Service rate the country one level higher.

Credit Suisse Group AG and VTB Capital Plc are arranging the exchange offer. The bond was originally a loan from the two banks for the purchase of tuna-fishing boats. It was then packaged into so-called loan participation notes and sold to global bond investors.

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