A core group of Mozambique’s international creditors dismissed as a “non-starter” a debt restructuring plan the country presented on Tuesday, balking at the idea of a second painful writedown in as many years.
The group rejected three scenarios for restructuring roughly $2 billion of debt that the finance ministry unveiled in London, and which one bondholder said were a likely prelude to long negotiations.
Shortly after restructuring a Eurobond in 2016, Mozambique’s government admitted to $1.4 billion of previously undisclosed loans, many of which went on upgrading maritime and military security.
The disclosure prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a default in what was already one of the world’s poorest countries.
Tuesday’s scenarios, presented 17 months since Maputo said its debt was unsustainable and needed restructuring, included extending maturities on the outstanding defaulted debt to between eight and 16 years and a 50 percent “haircut” – or writedown – on owed interest and penalty payments.
A group representing the holders of a Mozambique Eurobond earmarked for debt restructuring rejected a proposal tabled by Maputo at a meeting in London on Tuesday.
“This is a non-starter for the Eurobond holders,” said Thomas Laryea at Cooke Robotham LLC, legal adviser to the Global Group of Mozambique Bondholders (GGBM).
The GGBM says its members and bondholders supporting the group continue to hold over 80 percent of the issue.