Mozambique’s dollar bond rose over 2 cents after the U.S. approved a $5 billion loan for a crucial LNG project. The bond, maturing in 2031, reflects the financial health potential tied to gas reserves, which have been delayed due to unrest and political issues. Discussions with the IMF for additional aid are ongoing.
Mozambique’s sovereign dollar bond experienced a notable increase of over 2 cents on a recent Friday, following the United States’ approval of a significant $5 billion loan for a liquefied natural gas (LNG) project essential for the nation’s financial well-being. According to Tradeweb data, the bond maturing in 2031 rose by 2.32 cents, reaching a bid price of 81.35 cents on the dollar by 0920 GMT.
The loan from the U.S. Export-Import Bank had previously faced delays, necessitating re-approval after France’s TotalEnergies halted construction of the gas project in northern Cabo Delgado in 2021 due to a serious attack by Islamist militants. The exploitation of these sizable gas reserves is vital for economic advancement in Southern Africa, with the project’s delays heavily impacting government revenues and hindering growth.
Additionally, unrest related to a contentious election last year and the impact of a devastating cyclone in December have further strained the government’s financial situation. Consequently, the Mozambique administration is currently engaging with the International Monetary Fund (IMF) to secure another bailout upon the conclusion of its existing program later this year.
In conclusion, Mozambique’s sovereign dollar bond has seen an upswing following the U.S. approval for a pivotal $5 billion LNG loan. This funding is critical for the country’s economic development, especially after facing challenges such as political unrest and natural disasters. The government’s ongoing negotiations with the IMF for further financial support underscore the urgency of stabilizing the nation’s finances.
Original Source: www.marketscreener.com
