MOZAMBICAN GOVT RATIFIES EMATUM BONDS DEAL

The Mozambican government has ratified the deal under which the securities issued by State-owned Mozambique Tuna Company (EMATUM) in 2013 are replaced by sovereign government bonds with a longer repayment time, but at a higher interest rate.

Speaking after the weekly meeting of the Council of Ministers (Cabinet) here Tuesday, Government Spokesman and Deputy Health Minister Mouzinho Saide said the agreement now ratified was signed in Maputo on Monday between the government and the two banks which had arranged the original loan issue, Credit Suiise and VTB or Russia.

This was only possible after the great majority of the bondholders — 81.5 per cent — had agreed to the swap.

The bonds issued in 2013, were for 850 million US dollars. The stated purpose behind raising these funds was to purchase, from a shipyard in the French port of Cherbourg, 30 vessels — 24 tuna fishing boats, and six modern military speedboats for maritime and coastal protection duty.

The repayment terms were extremely tough; the money was to be repaid over seven years, with a two-year grace period, and at an interest rate of LIBOR (London Inter-Bank Offered Rate) plus 6.5 per cent.

The proposal accepted by the bondholders is that the EMATUM bonds (now down to 697 million US dollars, after the first repayments) will be swapped for government bonds for 585.5 million USD maturing in 2023. The interest rate, however, shoots up to 10.5 per cent.

For the government, the advantage is that it will not have to repay the capital until 2023. Until then, it will only be obliged to make annual interest payments. The government’s assumption is that by 2023, revenue will be flowing in from the vast natural gas fields in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

The export of liquefied natural gas (LNG) is expected to begin around 2020, and the forecast is that Mozambique will become the third largest exporter of LNG in the world.

“Ratification of this agreement means that Mozambique will benefit from repayment terms that are more satisfactory for the country’s public finances”, said Saide.

The government now has an extra two years to repay, and the yearly burden on the Treasury falls from the current 200 million USD to about 76 million USD. Saide said this figure would be paid in instalments of 38 million USD every six months.

Source: NNN-AIM