Mozambique’s only international dollar-denominated bond fell on Thursday, January 15, after President Daniel Chapo stated that the country could move forward with debt renegotiation once a new agreement with the International Monetary Fund (IMF) is finalised.
The international bond XS2051203862=TE, maturing in 2031, dropped by 1.4 cents, trading at 84.12 cents per dollar, according to Tradeweb data. The decline followed Chapo’s interview with Bloomberg Television, in which the President emphasised the priority of restoring investor confidence.
Chapo clarified that Mozambique will only begin negotiations with creditors after reaching an understanding with the IMF. “Discussions will be conducted with international partners, and the government’s priority is to create a trusted environment for investors,” he said. The President did not specify whether the renegotiation would include the 2031 bond in particular.
However, the head of state indicated that the government’s focus could shift to debt with international partners once an agreement with the fund is in place. “The government may proceed with debt renegotiation once the IMF agreement is effective,” he stressed, highlighting the importance of a strategy that preserves the country’s external credibility.
The IMF confirmed that it is aware of the news regarding a potential restructuring of Mozambique’s debt. “While these discussions are ongoing, we continue to work closely with the country to support its efforts to maintain macroeconomic stability,” said a spokesperson. The institution added that an extended credit line requested in April 2025 is under negotiation.
Currently, the 2031 bond is trading with a yield of around 14%, reflecting the return required by investors and signalling a high perceived risk. Mozambique’s external public debt totalled approximately $9.8 billion at the end of 2024, with China holding roughly 14% of this amount.
The fall in the international bond reflects market caution in response to the President’s statements and the ongoing process with the IMF. Analysts emphasise that investor confidence will depend on the success of negotiations with the fund and the government’s clarity regarding future external debt management.
Source: Bloomberg
