Mozambique’s dollar bond rose after the U.S. approved a $5 billion loan for an LNG project essential for the country’s economy. This approval comes after delays due to security concerns. The economic strain from unrest and natural disasters has led the government to seek a new bailout from the IMF.
Mozambique’s sovereign dollar bond increased by over 2 cents following the U.S. approval of a $5 billion loan for a liquefied natural gas (LNG) project, which is vital for the country’s economy. As of 0920 GMT on Friday, the bond, maturing in 2031, rose by 2.32 cents, reaching a bid of 81.35 cents on the dollar according to Tradeweb data.
The U.S. Export-Import Bank’s loan required reapproval due to halted construction by France’s TotalEnergies. This pause followed a significant attack by Islamist insurgents in Cabo Delgado, impacting project continuation. The gas fields are essential for Mozambique’s economic progress, and the project’s delay has adversely affected government finances and hindered growth.
Moreover, Mozambique faced challenges from political unrest after a contested election last year and a devastating cyclone in December. These events have intensified financial pressures on the government, which is currently negotiating a new bailout with the International Monetary Fund (IMF) to replace its existing program set to conclude later this year.
The U.S. clearance of a significant $5 billion loan for Mozambique’s LNG project has positively influenced the country’s sovereign dollar bond. This development is crucial as it aids Mozambique’s economic stability amid political unrest and natural disasters that have strained finances. The ongoing discussions with the IMF further highlight the government’s efforts to secure financial support amidst these challenges.
Original Source: www.marketscreener.com
