Mozambique’s Dollar Bond Rises Following U.S. LNG Loan Approval

Mozambique’s dollar bond rose over 2 cents after the U.S. approved a $5 billion LNG loan, seen as vital for the nation’s economy. This increase follows significant delays due to security issues and ongoing financial strains. The government is pursuing IMF assistance as it confronts ongoing economic challenges.

Mozambique’s sovereign dollar bond witnessed a notable increase of over 2 cents, as reported by Tradeweb data, following the U.S. approval of a long-awaited $5 billion loan for a significant liquefied natural gas (LNG) project essential to the country’s economic stability. The bond, maturing in 2031, reached a bid of 81.35 cents on the dollar at 0920 GMT, reflecting improved market confidence.

The U.S. Export-Import Bank’s loan required re-approval due to a previous halt in the gas project by France’s TotalEnergies, triggered by an Islamist insurgent attack in 2021. The gas fields’ development is critical for Mozambique’s economic progress, as the execution delays have detrimentally impacted governmental finances and hindered growth.

Additional challenges, including unrest from a disputed election last year and a recent severe cyclone in December, have further exacerbated fiscal pressures. In light of these issues, the government has engaged in discussions with the International Monetary Fund (IMF) for a new bailout as its existing program is set to conclude later this year.

The U.S. approval of the $5 billion loan for Mozambique’s LNG project has positively affected the country’s sovereign bond, highlighting the project’s significance in fostering economic recovery. However, ongoing political unrest and natural disasters continue to threaten financial stability. As Mozambique navigates these challenges, negotiations with the IMF for further financial support will be crucial.

Original Source: www.marketscreener.com