Mozambique’s dollar bond rose over 2 cents after the U.S. approved a $5 billion loan for a liquefied natural gas project, critical for the country’s economy. The bond, maturing in 2031, reached 81.35 cents on the dollar. Delays due to security concerns have affected government finances, necessitating discussions with the IMF for further support.
On March 14, Mozambique’s sovereign dollar bond experienced a notable increase, rising over 2 cents following the clearance of a significant $5 billion loan from the United States, intended for a vital liquefied natural gas project. According to Tradeweb data, the bond, maturing in 2031, increased by 2.32 cents, reaching a bid price of 81.35 cents on the dollar as of 0920 GMT.
This loan from the U.S. Export-Import Bank had previously faced delays necessitating re-approval after construction on the gas project was halted in 2021 by France’s TotalEnergies, following a serious attack by Islamist insurgents in the Cabo Delgado region. The development of these vast gas fields is essential for Mozambique’s economic progress, and the protracted delays have had a detrimental impact on government finances and disrupted growth.
Furthermore, unrest stemming from a contested election last year and the impact of a deadly cyclone in December have exacerbated the financial strain on the state. The Mozambican government is actively engaging in discussions with the International Monetary Fund regarding a potential bailout that would commence upon the conclusion of its current financial program later this year.
In summary, the clearance of the $5 billion loan by the United States has provided a much-needed boost to Mozambique’s dollar bond, reflecting investor confidence in the country’s potential economic recovery through the liquefied natural gas project. However, the nation still faces challenges including previous delays, natural disasters, and political unrest, requiring ongoing support from international financial institutions to stabilize its economy.
Original Source: www.marketscreener.com
