This African country will continue debt restructuring talks despite ‘tuna bond’ court ruling

PUBLISHED: Thu, 12 Sep 2019 10:25:08 GMT

MAPUTO (Reuters) – Mozambique will continue to negotiate debt restructuring with creditors, despite a court ruling that a government-guaranteed $850 million Eurobond issued by the state fishing company Ematum SA in 2013 was illegal, the finance minister said on Wednesday.

Finance Minister Adriano Maleiane told a business conference in Maputo that the debt restructuring talks were not in violation of the June ruling by Mozambique’s top court.

The $850 million Eurobond was dubbed the “tuna bond” as it was supposed to finance a tuna fishing fleet and had been presented to investors as funding for fishing infrastructure, although much of the cash was later designated for maritime security and reallocated to the defence budget.

In 2016, Mozambican officials agreed to swap the tuna bond’s outstanding $697 million for a sovereign Eurobond.

“The government respects the deliberations of our institutions,” Maleiane said. “The decision of the Constitutional Council is a decision that cannot be overturned. It has to be respected and we are respecting it.”

Maleiane said that the restructuring was meant to only repay lenders who acted in good faith.

“The government cannot tell bona fide creditors that ‘I will not pay back.’ I can’t tell the creditors that I am awaiting the payment of the money taken by those who contracted the loans,” Maleiane said.

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“The Attorney General Office has the task of pursuing the $850 million on those who acted in bad faith,” he added.

On Monday the government said creditors holding 99.5% of Mozambique’s $726.5 million Eurobond support its debt restructuring proposal, paving the way for an overhaul of part of its heavy debt burden.

Reporting by Manuel Mucari; Editing by Lisa Shumaker