Mozambique’s Dollar Bond Gains Following U.S. $5 Billion LNG Loan Approval

Mozambique’s dollar bond rose over 2 cents after the U.S. approved a $5 billion loan for a crucial LNG project. The bond is now quoted at 81.35 cents on the dollar. Delays in the project due to insurgent activities have strained the country’s finances, leading to IMF bailout discussions.

Mozambique has experienced an uptick in its sovereign dollar bond, which rose over 2 cents on March 14th following the clearance of a $5 billion loan by the United States. This loan, approved by the U.S. Export-Import Bank, is critical for a liquefied natural gas (LNG) project essential to Mozambique’s financial stability.

As of 0920 GMT, the bond maturing in 2031 was quoted at 81.35 cents on the dollar, reflecting a gain of 2.32 cents according to data from Tradeweb. This re-approval was required after construction on the LNG project, pivotal for economic growth, was halted by France’s TotalEnergies in 2021 due to violence from Islamist insurgents in Cabo Delgado, the site of the gas fields.

The development of these gas resources is vital for the economic progress of Mozambique, where delays have fundamentally impacted government finances and growth prospects. Additional pressures have arisen from recent unrest after a contentious election and the aftermath of a severe cyclone in December, further destabilizing the nation’s fiscal health.

In response to ongoing financial challenges, the Mozambican government is engaged in discussions with the International Monetary Fund (IMF) regarding a new bailout package, which is anticipated to commence once the current program concludes later this year.

The approval of the U.S. loan has significantly improved Mozambique’s dollar bond, confirming its importance for the country’s economic recovery. As Mozambique navigates economic strains from unrest and natural disasters, the successful implementation of the LNG project remains crucial. Furthermore, ongoing negotiations with the IMF for financial support signal the government’s proactive approach to stabilizing its economy amid challenging circumstances.

Original Source: www.marketscreener.com