Mozambique: Country confirms state firm missed debt payment deadline

"We have no control over the operation being carried out by the company with the creditors," he said.

Fishing boats sit beneath the skyline of Mozambique's capital Maputo, April 15, 2016.  

State-owned Mozambique Asset Management (MAM) missed a May 23 deadline to make a $178 million loan repayment but remains in talks with creditors about rescheduling the debt, finance ministry spokesman Rogério Nkomo said on Wednesday.

In the latest twist to a debt crisis and graft scandal, Nkomo told Reuters a sovereign guarantee behind MAM's $535 million loan from Russia's VTB Bank would not become an issue until the talks concluded.

"We have no control over the operation being carried out by the company with the creditors," he said.

Ratings agency Fitch downgraded the war-scarred southern African nation's credit to CC from CCC on Monday, indicating that "a default of some kind appears probable".

Shortly afterwards, a finance ministry source told Reuters that MAM had missed the loan payment and the government had failed to honour its guarantee.

Fitch's decision was based on news that emerged last month of at least $1.35 billion in secret borrowing for defence and maritime infrastructure.

Slowing growth and delays to the start of offshore gas production have added to Mozambique's cashflow problems.

News of the clandestine borrowing has pushed Mozambique's total foreign debt to $9.86 billion to 80 percent of GDP - a ratio that is climbing as its currency, the metical, falls due to a collapse in investor confidence.

The metical was trading at 56.77 to the dollar on Wednesday, just shy of a record low of 59 touched last week. This time last year, the currency was trading at 35 to the greenback.

The VTB loan had been earmarked for the construction of shipyards in the capital, Maputo, and the northern town of Pemba to service the former Portuguese colony's nascent but potentially huge offshore gas industry.

The shipyards have not materialised, however, and International Monetary Fund managing director Christine Lagarde said last week the secret borrowing was "clearly concealing corruption".

Since its debut on April 12, the yield on a rescheduled $850 million 2013 Eurobond has climbed from 12.76 percent to 16.76 percent on Wednesday, according to Thomson Reuters data.

The money from the Eurobond instead paid for a tuna-fishing fleet. But the 24 boats that have been delivered are sitting at anchor in Maputo harbour. Finance minister Adriano Maleiane said this week they failed to meet European Union specifications and needed a refit.