Mozambique tuna-bond investors show concern before restructure

Yields on an $850 million Eurobond issued by Mozambique’s state tuna-fishing company, Empresa Mocambicana de Atum SA, soared to a record on Tuesday as investors await details of a restructuring proposal from the government.

The yield rose 31 basis points to 13.46 percent by 1:40 p.m. in Maputo, the capital of the south-east African nation. The bonds, which have a state guarantee, lost 7 percent in the year through Feb. 8, compared with an average of 4.1 percent for dollar debt issued by sub-Saharan African governments and a gain of 0.1 percent for emerging-market Eurobonds, according to Bloomberg indexes.

Mozambican’s government said in June it wanted to restructure the country’s only Eurobond to reduce annual debt payments, amid a slump in commodity prices that has battered the coal- and gas-rich economy. Ematum, as the company is known, is scheduled to pay its next coupon on March 11.

“Although the government has confirmed that it seeks a more favorable repayment structure for this debt, it appears that not much progress has been made,” Samantha Singh, a Johannesburg- based analyst at Standard Bank Group Ltd., said in an emailed note to clients on Tuesday. The rise in yields also reflects “some nervousness” before the coupon payment, she said. “We are not recommending going overweight on the bond just yet as it could get cheaper still.”

 – Bloomberg