03/03/2024

Mozambique pays $142 million to settle Credit Suisse loan dispute.

Credit Suisse logo on the side of a building in Mozambique.

Credit Suisse logo on the side of a building in Mozambique.

Mozambique paid approximately $142 million to creditors in relation to an agreement on a $522 million loan facilitated by Credit Suisse from UBS Group AG, associated with the naval financing scandal. This information was revealed in a report from the International Monetary Fund. The payment comprised about $96 million in local currency bonds and $46 million in cash. Although Mozambique announced the out-of-court agreement in October, details about the costs were not initially provided.

The agreement covered $522 million of the total $622 million in debts associated with the loan that Credit Suisse helped arrange for the state-owned maritime security company ProIndicus about a decade ago. These loans were guaranteed by the government without informing the IMF as required. The debt was part of a $2 billion coastal project at the center of a bribery and corruption scandal that led to legal proceedings in different parts of the world and the imprisonment of the son of then Mozambican President, Armando Guebuza.

Credit Suisse, now part of UBS after the acquisition last year, initially financed the construction of a new coastal patrol force and a tuna fishing fleet for Mozambique. The country claims that the Swiss bank ignored warnings and corruption from its own bankers. Hundreds of millions were allegedly looted from Mozambique, leading the country into an economic crisis.

UBS declined to comment when contacted by email. Credit Suisse held about 54% of ProIndicus’s total debt, while a group of commercial creditors held 18%. VTB Capital held approximately 28% and was excluded from the settlement in October. The Mozambican government signed settlement agreements with creditors holding 82% of the total $986.8 million debt that ProIndicus had accumulated, including interest.

The 6.2 billion meticais, equivalent to $97 million at Wednesday’s exchange rate, in bonds issued by Mozambique under the agreement, have a maturity of six years, with a two-year grace period for capital payments. The interest rate is fixed at 18% for the first two years, after which it fluctuates with the Treasury bill rate plus 200 basis points.

Mozambique made the early cash payment using part of the revenue from a $66 million fee the state received for canceling a natural gas exploration project, as indicated in the IMF report. (Bloomberg)

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