Mozambique to Share Gas Revenue in ‘Tuna Bond’ Restructuring

Mozambique to Share Gas Revenue in ‘Tuna Bond’ Restructuring

Mozambique’s Finance Ministry on Tuesday said it has reached an agreement with creditors to restructure a $726.5 million Eurobond, including extending maturities and sharing future revenues from huge offshore gas projects.

Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4 billion of previously undisclosed lending, much of which was supposed to be spent on a tuna fishing fleet.

The disclosure prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a debt default. Mozambique has since missed bond repayments.

The ministry said the proposed restructuring would see bondholders receive new paper maturing in 2033, with principal repayments beginning in 2029.

The finance ministry said “The new bonds will have a face value of $900 million with a coupon of 5.875 per cent.”

Creditors would also receive 5 per cent of future fiscal revenues from the Area 1 and Area 4 natural gas projects. The payments from gas revenues would be capped at $500 million a year but could still be a boon for bondholders.

Mozambique’s Rovuma Basin boasts gas resources of around 180 trillion cubic feet, enough to underpin massive liquefied natural gas export plants under development by global energy firms including Exxon Mobil, Anadarko and Eni.

Mozambique said the four creditors who had agreed to the restructuring control around 60 per cent of the 2023 bond.

Bondholders made a restructuring proposal to Mozambique in August after rejecting an earlier offer from the government.

According to an independent audit, credit Suisse and Russian lender VTB were key organisers of lending to Mozambique, receiving almost $200 million in fees.

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