Scenario may materialise in 2024 if gas production is delayed and compromises the expected increase in revenues, says the financial ratings agency.
Financial ratings agency Moody’s considers that Mozambique is at risk of going into Financial Default (‘default’) again in 2024 if gas production is delayed and compromises the expected increase in revenues.
“Total’s decision regarding the suspension of production will not have an immediate impact, but as the payment of debt securities depends on revenues, the postponement of production and the delay in revenues could be the trigger for a new ‘default’,” said the director of the sovereign risk analysis group at Moody’s financial rating agency.
In an interview with Lusa, Marie Diron stressed that “there is still time [to avoid default], because as the payment of bonds becomes more expensive as of 2024, there are several years for the government to reassess the sources of funding,” but warned that “taking into account the previous history of the government, there is a risk and that is why the rating is low,” and is currently at Caa2, near the bottom of the sovereign credit quality assessment scale.
The restructuring of debt securities that Mozambique undertook following the so-called ‘hidden debt scandal’ reduced the interest payable until 2023, but almost doubled the payments, from 5% to 9% per year, from that year, which was the time when natural gas exports were expected to begin, whose tax revenues would support the increased costs.
Moody’s looks at 28 countries in Africa, ranging from A3 for Botswana to Ca for Zambia, with a concentration of opinion on credit quality more at the lower end of the scale
