November 14, 2013, 2:51 pm
The deal that helped one of the poorest nations raise $850 million and bond investors lock in rates three times higher than US treasuries is also spurring concern some of the money isn’t going where the buyers expected.
Two months ago, Credit Suisse Group AG and VTB Capital Plc financed a flotilla of tuna boats for Mozambique, then packaged the debt into notes for overseas investors.
Shortly after, Mozambique placed a €200m ($270m) order for 30 vessels to be built at a French shipyard in Cherbourg, Normandy, as Undercurrent News published. The order, signed on Sept. 5, was for 24 trawlers and longliners, as well as three 32-meter patrol boats, and three 42-meter patrol boats.
But Bloomberg reported this week that the fleet also includes anti-pirate patrol boats, according to the French foreign trade ministry.
They are capable of being equipped with 20-meter cannons and military drones, according to Stratfor, a global security advisory firm.
Credit Suisse is adamant that its funding wasn’t used for armed boats.
“The documents mentioned only fishing boats and some training costs,” said Marco Ruijer, who helps oversee about $8 billion in emerging-market bonds at ING Investment Management in The Hague and bought a piece of the debt from VTB Capital because the investment promised such high returns.
As central banks keep interest rates at historic lows, investors are trading transparency for higher payouts, Bloomberg admitted.
Tanzania, with an unrated $600m private deal, and Angola, with a $1bn transaction structured in a similar way to Mozambique’s, also made debuts in the international debt market in the last 15 months without disclosing details that buyers of lower-paying Eurobonds would require.
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