Mozambique bonds rise after TotalEnergies lifts force majeure on LNG project

Colleen Goko

JOHANNESBURG - Mozambique’s only euro bond rose on Monday, after TotalEnergies lifted the force majeure for its multi-billion dollar liquefied gas project. This will allow construction to resume, following long delays.

Dollar bonds maturing 2031 rose over 2 cents. Bids were at 89.38cents per dollar as of 1112 GMT. This brought the yield to 12.53 percent, the lowest in two weeks.

The lifting of the force majeure is an important sign for this project. Its potential export revenues could transform the Mozambique economy. However, the 13 million tons per year plant is not expected to be operational until 2029.

The plant is located in conflict-prone Cabo delgado Province. It has been reported that 40% of the project is complete. However, regional security concerns continue despite Rwanda's military support.

Morgan Stanley strategists Neville Mandimika & Simon Waever wrote in a report that Mozambique’s “near-term vulnerability and its long-term potencial could not be more stunning”, citing financial constraints & political tensions after the unrest following last year’s elections.

They added that if the country maintains stability and implements prudent reforms, then the LNG boom in 2029/2030, which is expected, could create fiscal room, improve the balance-of-payments and support broad based growth. (Reporting and editing by Sfundo parakozov; Joe Bavier, Emelia Sithole Matarise, and Colleen Goko)

(source: Reuters)