Mozambique’s dollar bond rose over 2 cents after the U.S. cleared a $5 billion LNG loan, deemed vital for the country’s economy. This increase reflects investor confidence amid economic stress caused by delays and unrest. The government is seeking additional support from the International Monetary Fund as its current program concludes.
On March 14, reports indicated that Mozambique’s sovereign dollar bond experienced an increase of over 2 cents, as per Tradeweb data. This growth followed the United States’ approval of a significant, long-awaited $5 billion loan intended for a liquefied natural gas project, deemed vital for the country’s financial stability. By 0920 GMT, the bond, maturing in 2031, was bid at 81.35 cents on the dollar, reflecting a gain of 2.32 cents.
The loan from the U.S. Export-Import Bank had to undergo re-approval due to construction suspension by France’s TotalEnergies on the gas project in Cabo Delgado, which had been prompted by a major insurgent attack in 2021. These extensive gas fields are essential for the economic progress of Mozambique; however, delays have had a negative impact on government finances and hindered growth.
Moreover, the situation has been exacerbated by unrest following a contested election last year and a destructive cyclone that struck in December, further burdening the nation’s finances. The Mozambican government is currently in negotiations with the International Monetary Fund for another financial rescue package as its existing program is set to conclude later this year.
In summary, Mozambique’s sovereign bond has seen an increase following the U.S. approval of a $5 billion LNG loan, which is vital for the country’s economic recovery. The bond’s performance highlights investor confidence in Mozambique’s prospects, despite recent challenges including security issues and natural disasters. Ongoing discussions with the International Monetary Fund indicate a proactive approach by the government to secure further financial support.
Original Source: www.marketscreener.com
