Mozambique’s dollar bond increased by over 2 cents after the U.S. approved a $5 billion loan for a crucial LNG project. The loan faced delays due to security issues and is essential for the nation’s economic stability. Ongoing unrest and a cyclone have exacerbated financial strains, prompting the government to seek an IMF bailout.
On March 14, 2023, Mozambique’s sovereign dollar bond experienced a notable increase, rising over 2 cents following the United States’ approval of a $5 billion loan for a significant liquefied natural gas (LNG) project. The bond, due to mature in 2031, reached a bid of 81.35 cents on the dollar, as reported by Tradeweb data.
The U.S. Export-Import Bank loan had faced a re-approval process necessitated by the suspension of construction by France’s TotalEnergies in 2021, which was a result of a severe attack by Islamist insurgents in the Cabo Delgado region. These vast gas fields are essential for Mozambique’s economic progress, and delays in the project have severely impacted governmental finances and inhibited growth.
In addition to the delays caused by the gas project, Mozambique has faced unrest following a disputed election the previous year, coupled with the destructive impact of a cyclone in December, further straining state resources. Furthermore, the government is currently engaged in discussions with the International Monetary Fund regarding a potential bailout, which is anticipated to occur once their existing program concludes later this year.
Mozambique’s financial situation is beginning to show signs of improvement, exemplified by the rise in its dollar bond following the U.S. loan approval for the LNG project. This $5 billion loan is not only vital for the gas sector but also essential for stabilizing the nation’s economy, which has been subjected to various crises including political unrest and natural disasters. The discussions with the International Monetary Fund further indicate the government’s proactive approach to address its financial challenges.
Original Source: www.marketscreener.com
