Mozambique’s dollar bond continued its downward trajectory for the third consecutive day on Wednesday, as concerns over potential public unrest following the disputed election results persisted.
The country’s sole eurobond, maturing in 2031, experienced a decline of 0.54 cents, reaching a bid price of 84.92.
Since Friday, the bond has suffered losses exceeding two cents.
While the full results of the October 9th national election are anticipated this week, opposition candidates have alleged electoral fraud.
The recent killing of an opposition lawyer and a party official in the capital, Maputo, coupled with police clashes with protesters, has heightened tensions.
Kevin Daly, a portfolio manager at abrdn, attributed the decline in the 2031 eurobond to the election-related violence.
Additionally, he noted a broader selloff of Sub-Saharan African bonds due to rising U.S. Treasury yields.
Tellimer economist Jamie Fallon expressed concerns that the funeral of the slain opposition figures could serve as a catalyst for further protests.
Mozambique’s financial situation is strained by high borrowing costs and the impact of insecurity on liquefied natural gas production, a crucial revenue source.
The country’s debt burden is substantial, approaching the size of its annual GDP.
Last week, S&P Global Ratings downgraded Mozambique’s long-term local currency sovereign credit rating to “CCC” from “CCC+,” citing an increased likelihood of missed payments on domestic debt or a distressed debt exchange.