Tuna bond resolution leaves questions unanswered in Mozambique

Author: John Crabb | Published: 10 Jun 2019

Following years of speculation, prosecutions, corruption and outright confusion, Mozambique’s sovereign debt debacle – often referred to as the tuna bond scandal – has come to a largely satisfactory, but potentially unnecessary, conclusion.

The $727 million eurobonds that were issued in 2016 – after it transpired that the country's inaugural bond issuance was heavily flawed – are set to be successfully restructured come September. But critics suggest that the country may not have actually needed to honour its outstanding debt after all.

Details of the restructuring were confirmed on May 31 by the Irish Stock Exchange. Members of the Global Group of Mozambique Bondholders (GGMB) agreed in principal to new debt securities representing senior unsecured obligations of the Republic of Mozambique to the value of $900 million, due 2031, with interest rates of five and nine percent. Crucially, these new bonds are not tied to the country's inaccessible liquid natural gas (LNG) reserves.