Elaine Moore in London and Andrew England in Maputo Less than one month after Mozambique appeared to have resolved its $700m “tuna bond” scandal, international investors are seeking legal opinion as new details emerge about the impoverished African country’s debt burden

Sovereign Bonds Add to myFT ‘Tuna bond’ controversy deepens Row over Mozambique paper highlights dangers of EM capital markets Read next Fast FT ECB to buy bonds below deposit rate: but what does it mean? The Mozambique tuna-bonds-turned-sovereign bonds will probably rot again © Dreamstime Twitter Facebook LinkedIn 5 Save MAY 5, 2016 by: Elaine Moore in London and Andrew England in Maputo Less than one month after Mozambique appeared to have resolved its $700m “tuna bond” scandal, international investors are seeking legal opinion as new details emerge about the impoverished African country’s debt burden. Sample the FT’s top stories for a week You select the topic, we deliver the news. Select topic Enter email addressInvalid email Sign up By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy. An informal group of investors say Mozambique, Credit Suisse and Russian bank VTB did not provide them with sufficient details about outstanding government-guaranteed debt during negotiations to swap tuna-fishing company Ematum bonds for a new government bond. As Mozambique’s new bond is listed in Ireland, investors say the parties involved could be liable to pay compensation under Irish statutory provisions if there was any omission of information required by EU prospectus law. The price of the country’s bond has fallen from 90 cents in the dollar to 77 cents. The dispute is one of the first instances of fallout from a global boom in emerging market debt that has propelled billions of dollars into countries with poor credit profiles as investors search for positive returns amid record low rates in developed markets. Mozambique’s tuna bond was originally a loan provided in 2013 by Swiss bank Credit Suisse and a subsidiary of Russia’s VTB for a new state-backed company, Ematum, to purchase a tuna-fishing fleet. It was then sold on to global investors including Aberdeen Asset Management, Allianz Global Investors and AllianceBernstein. However, the country came under scrutiny after it was found to have spent the proceeds largely on patrol vessels and other security equipment, which officials claimed were necessary to protect fishing boats. As prices for the bond fell, Mozambique offered to swap the debt for a new government bond in a deal described by investors as “friendly”. Yet while the exchange was initially regarded as a success, news that the country had not disclosed all of its debt to the International Monetary Fund, leading the IMF to suspend funding, has since reignited tensions. Loans were arranged for Mozambique by Credit Suisse and VTB, with $622m going to state-linked company ProIndicus and a further $535m for Mozambique Asset Management. Debt was disclosed to investors who took part in the bond exchange as a total figure in the prospectus, although specific loans and maturities were not mentioned. Credit Suisse declined to comment. VTB said: “We do not believe that there was any undisclosed conflict of interest and there was no material non-disclosure.” Antonio Do Rosario, chief executive of ProIndicus and Mozambique Asset Management, and the chair of Ematum, said the two loans had a seven-year tenure, but added that he was seeking to restructure the MAM bond to increase its term. Greg Saichin at Allianz, one of the investors that accepted Mozambique’s debt exchange, said the developments that had come to light were “surprising”. The disclosure of additional state-guaranteed debt previously excluded from official statistics has led Fitch to downgrade Mozambique’s rating. On Wednesday, rating agency Moody’s said the IMF’s suspension of financial assistance was “credit negative”. Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.