Mozambique 11 March: A tough sell for Maleiane
Good afternoon. Mozambique finance minister Adriano Maleiane will set off on a whirlwind tour of the world’s financial capitals this weekend to try and sell a new deal to investors who hold the $700 million of remaining EMATUM bonds, on the day the country made the latest $100 million repayment.
Zitamar reported yesterday that Maleiane will ask investors to take a 20% cut in the value of the notes - which is nevertheless higher than the price they were trading at in the secondary market, displaying a lack of confidence among investors that Mozambique will be able to honour the commitment made in 2013. Other sources however are disputing that there is any ‘haircut’ involved - as can be seen in the comments below the story.
SEE: Mozambique to restructure $850m ‘guns-and-tuna bond’
Another reason investors might have been selling the bonds cheap is the stigma that has become attached to them. The government admitted that instead of going on fishing equipment, $500 million of the loan was in fact spent on defence. As Mozambique’s defence forces come under increasing scrutiny over human rights abuses, international investors will be even more reluctant to be associated with the deal.
SEE: Mozambique investigating human rights abuse allegations
There have been calls today for the government to extend its investigation into human rights abuses beyond just the province of Tete, the home of the now 11,000 refugees who have fled to Malawi. A number of reports published over the last week, particularly in online newspaper @Verdade, point to more widespread abuses by government forces. Meanwhile, the intensity of fighting between them and Renamo’s militia appears to be increasing.
SEE: Fighting intensifies in Mozambique as human rights concerns spread
The insecurity in central Mozambique is contributing to inflation and food shortages which were already severe thanks to the drought in southern Mozambique. National statistics agency INE this week published February’s inflation figures which continue the upward trend of recent months, with inflation topping 12% over the last year to date. The Bank of Mozambique has to decide on Monday whether further interest rate rises are justified to try and keep a lid on price rises.
SEE: Inflation rises again as drought and conflict hit Mozambique food supplies
Transparency watchdog organisation CIP this week dug into the shareholding structure behind Profin Consulting, the mysterious Mozambican company involved in the African Renaissance Pipeline proposal that was announced last week. CIP’s research revealed, to no one’s surprise, that Frelimo heavyweight Alberto Chipande is one of the owners of the company, while the public face is Olivia Machel, daughter of the country’s first president.
SEE: Cabo Delgado power-brokers behind Chinese pipeline bid – CIP
Meanwhile, there has been a set-back for Mozambique’s nascent graphite sector, as Triton Minerals admitted it may not have the funding to continue as a going concern. The company boasted the world’s largest graphite resource at its Balama licence in Cabo Delgado, but it is lagging behind neighbour Syrah in the race to bring Mozambican graphite to the global market. Nevertheless, investors were taken aback by the announcement that Triton has called in administrators, just a day after it unveiled a new corporate strategy.
SEE: Triton admits it could go bust after Mozambique graphite plan fails to impress
More details should emerge next week on exactly how the Mozambique government plans to restructure the EMATUM debt.
In the meantime, have a great weekend - and spare a thought for Adriano Maleiane.