In Its latest rating, Moody’s said the country’s classification has reached the levels of “junk” and it expects no improvement in credit quality in any sub-Saharan African country this year, adding that the outlook is generally negative in the region.
In the case of Mozambique, which has already anticipated in a statement that it will default on the sovereign debt forecast for 18th January, Moody’s analysts classify the country at the Caa3 level, that is, a level known as “junk”, due to the financial default with the creditors.
“Mozambique is on the same level as the “sister” Angola in terms of discouragement for investments. Both are at the “junk” level.
However, Luanda has a slight advantage in the rating compared to Maputo, when it is classified in the level of B3 with stable evolution prospects” said a Moody’s statement seen by APA on Thursday.
Moody’s added in the report on the southern African country’s creditworthiness that government attempts at debt restructuring would likely extend beyond 2019 and that Mozambique’s fiscal strength was very low.
Mozambique admitted in 2016 to $1.4 billion of previously undisclosed loans, many of which went on upgrading maritime and military security.
The disclosure prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and leading to a debt default.
In December, the Mozambican government outlined three scenarios to overhaul its debt burden but Eurobond creditors rejected them, baulking at a second write down in as many years.
Moody’s rates Mozambique’s long-term foreign-currency debt at ‘Caa3’, deep into sub-investment grade.