Mozambique proposes solutions for Ematum’s problems

18 March 2016

The government of Mozambique has made a proposal to bondholders of Mozambican tuna company Ematum to exchange their bonds for new bonds with a fixed rate of 10.5 percent per year and an extension of maturity by three years to 2023, according to a document presented to investors.

Specifically, the proposed change involves a new issue of bonds amounting to US$585.5 million with a coupon of 10.5 percent and maturity in 2023 compared to the current bonds, which pay a rate of 6.3 percent per year, mature in 2020 and still have US$697 million to repay.

The problems with this bond issue, already dubbed the “tuna issue”, led to Moody’s and Standard & Poor’s lowering their rating on Mozambique, according to announcements released Tuesday.

Moody’s, for example, revised its rating on new bond issues downwards from “B2” to “B3”, which means that the bonds are considered speculative and high risk, and warned that this new rating was under watch for further review.

Standard & Poor’s, in turn, cut Mozambique’s credit rating by four levels, from “B-” to “CC”, which means “the issuer is currently in a highly vulnerable situation”, just two levels shy of “D” or default. (macauhub/MZ)