Standard & Poor’s downgraded the credit rating of Mozambique to “SD/D” in a decision announced on Wednesday following the country notifying it will fail to pay the first coupon of the bond issue by Mozambican tuna company Ematum.
The “SD” rating means that a debtor has selectively decided to default on payment of a coupon but it will make payments on other debt issues on time and the “D” rating means that a debtor has failed one or more payments.
The government of Mozambique announced on 16 January it lacked funds to pay US$59.7 million for the first coupon of a bond loan of US$726.5 million, maturing in 2023, which had already been restructured following an agreement reached with creditors.
The statement explained the default was due to degradation of the country’s macroeconomic and fiscal situation, “as mentioned by the Minister of Economy and Finance during the presentation to investors in London on 25 October 2016 and as reiterated in the statement issued by the Ministry on 14 November 2016.”
The Ministry said the government was working with the International Monetary Fund to establish the conditions for the resumption of a financial aid programme for Mozambique, “supported by an ambitious programme of reforms yet to be agreed, which will play an important role in improving the finances of the Republic and stabilisation of the country’s macroeconomic situation.”
Standard & Poor’s changed the long-term outlook for Mozambican debt in national currency from Negative to Stable and kept its credit rating of “B- /B”, with the argument that the Mozambican state will continue to honour its obligations in meticals. (macauhub)