Moody's downgrades Mozambique Government rating to B2.

Moody's Investors Service downgraded on 8 August Mozambique's government issuer rating to B2 from B1 and changed the outlook to negative.

In a statement, the ratings group said the key driver for the downgrade was the underperformance of Mozambique's fiscal and debt metrics vis-a-vis peers, which is expected to continue over the medium-term. The negative outlook, it said, reflects uncertainties over the government's strategy for covering its increasing external debt payments in foreign currency.

Concurrently, Moody's has lowered all long-term ceilings by one notch. The foreign currency deposits ceiling was lowered to B3 from B2, the foreign currency bond ceiling was changed to B1 from Ba3 and the local currency bond and deposits ceilings were lowered to Ba3 from Ba2. Moody's has also assigned Not Prime short-term ceilings.

Moody's has also downgraded the backed senior unsecured foreign-currency rating of Mozambique EMATUM Finance 2020 B.V. ('the EMATUM bond' which takes the form of a $850 million loan participation note issued in September 2013 by a special purpose vehicle of the Mozambican fishing company EMATUM) to B2 from B1 and changed the outlook to negative from stable. These changes mirror the changes in the rating and the outlook of the government of Mozambique.

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