Mozambique

Bribe allegations leveled in court against a VTB Group executive may complicate the Russian state-owned bank’s attempts to recoup a $535 million loan that’s part of a major debt scandal in Mozambique, Bloomberg News reported. A New York court heard testimony last month that the VTB executive in charge of the deal, Makram Abboud, took $2 million in kickbacks. The bank denies the allegations, made by a former Credit Suisse Group AG banker at a criminal trial in which VTB isn’t a party, and its employee hasn’t been charged with any wrongdoing.

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Almost half of frontier market countries are either at high risk of falling into debt distress or are already distressed, the IMF has said, up from zero as recently as 2014, the Financial Times reported. The warning comes as issuance of hard currency frontier market debt is set to hit a record high this year, with $38bn set to be raised, according to the IMF.

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The head of Russia’s state bank VTB Andrei Kostin and Mozambique President Filipe Nyusi discussed plans to restructure Maputo’s debt, with the aim to conclude a deal by the year-end. Mozambique needs to restructure a $535 million state-backed loan to Mozambique Asset Management (MAM) arranged by VTB, Reuters reported. The meeting between Kostin and Nyusi was held on Tuesday, a VTB spokeswoman told Reuters. VTB said in a statement on Wednesday that Kostin told Nyusi that the Russian bank would like to agree on the debt restructure plan by the end of this year.

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The trial against one of the alleged ringleaders behind $2 billion in fraudulent loans to Mozambique kicked off in New York on Tuesday, the same day citizens of the southern African nation cast judgment at the ballot box on whether their government had done enough to hold accountable officials involved in the secret deals, The Wall Street Journal reported. Mozambique, one of the world’s poorest countries, plunged into a debilitating crisis after the loans were disclosed in 2016, following reporting by The Wall Street Journal.

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Creditors holding 99.5% of Mozambique’s Eurobond support its debt restructuring proposal, the country’s government said in a statement on Monday, paving the way for an overhaul of part of its heavy debt burden, Reuters reported. Mozambique said in May it had agreed a restructuring deal “in principle” with the majority of holders of the $727 million notes maturing in 2023 MZ139100352= after a hidden debt scandal in 2016 prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and a default on the country’s sovereign debt.

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Mozambique plans to conclude restructuring its dollar bonds by the end of September, almost three years after first announcing the proposal, Bloomberg News reported. The southeast African nation asked holders of $727 million of debt due 2023 to exchange it for $900 million of notes maturing five years later. That’s mainly because the government expects it will have started earning revenue from Africa’s largest liquefied-natural-gas project, and won’t have difficulty in repaying debts.

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Mozambique’s talks with the International Monetary Fund (IMF) are making “encouraging progress,” as the country seeks to restore access to international financing, President Filipe Nyusi said on Wednesday, Reuters reported. Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4 billion (£1.15 billion) of previously undisclosed lending, prompting the IMF to cut off support and triggering a currency collapse and debt default.

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Mozambique has put on hold plans to raise funds for its portion of Anadarko Petroleum Corp.’s $20 billion gas project, as the government tries to limit its debt sales following a default about three years ago, Bloomberg News reporterd. Empresa Nacional de Hidrocarbonetos EP, the national oil company, will revive efforts to raise $2.3 billion for the liquefied natural gas project probably later in the year, after Anadarko starts implementing it, said ENH Chief Executive Officer Omar Mitha. That will help reduce risk and result in better terms, he said.

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Mozambique’s Constitutional Court nullified a government guarantee on a loan linked to the nation’s Eurobonds, potentially undermining a deal reached last week to restructure the debt, Bloomberg News reported. The judgment came three days after bondholders agreed with the government to reorganize $727 million of Eurobonds that Mozambique defaulted on in 2017. While bondholders said the nullification would have no impact on their agreement, lawyers said the decision may invalidate the debt.

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Mozambique’s top court has ruled that a government-guaranteed $850 million Eurobond issued by state-run tuna-fishing company Ematum in 2013 was illegal, court documents showed, Reuters reported. Mozambique has been battling to restructure its finances after the emergence in 2016 of about $1.4 billion of undisclosed borrowing that prompted the International Monetary Fund and foreign donors to cut financial support, triggering a currency crisis and a sovereign debt default.

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