Mozambique Dollar Bond Selloff Extends as Oil Price Shock Deepens Crisis

By Ray Ndlovu

March 25, 2026 at 4:57 PM GMT+1

A selloff on Mozambique’s dollar bonds extended into a 10th day, as the oil shock from the Iran war deepens the country’s financial crisis.

The $900 million note due 2031 slipped on Wednesday to 78.18 cents, the lowest since April 2025. The securities have slumped over seven cents in price since the war started, making Mozambique among the hardest hit credits in Africa. The yield on the bond rose Wednesday to almost 15%, according to CBBT composite pricing.

But Mozambique’s troubles started well before the conflict, with the International Monetary Fund and World Bank already sounding warnings over persistent debt-funded overspending. While it hosts some $50 billion worth of gas projects, progress has been slow, and now, it faces paying higher prices for fuel and fertilizer imports.

Giulia Pellegrini, lead portfolio manager at Allianz Global Investors, highlighted Mozambique and Senegal as countries where the situation has deteriorated most as a result of the oil price spike. In both nations, bond yield spreads over Treasuries are well above the 1,000 basis-point level, the mark commonly seen as denoting distress.

“In Mozambique’s case, tapping into its gas wealth is still some way off with insecurity in the north of the country having delayed gas projects,” Pellegrini said.

Africa's Most Distressed Credits Stay Under Pressure

Mozambique, Senegal spreads move in lockstep

Note: Data displayed is on a closing basis as of March 24

Source: JPMorgan Chase & Co

Read More: World Bank Says Mozambique Deficits Risk $50 Billion LNG Project

Within Mozambique, local lenders report foreign exchange backlogs as high as $800 million.

Authorities managed to raise the equivalent of $4.88 million in a debt auction on Tuesday. However, that source of funding looks precarious, given that banks are already limiting their participation in such sales.

Absa Bank Limited strategists who visited the country last week said the government isn’t servicing domestic bonds, bilateral external debt or Treasury bills issued to finance its day-to-day operations. That’s likely to lock the government out of borrowing on domestic as well as international markets.

“It neither pays interest nor settles maturing paper, merely conducting switch auctions,” Phumelele Mbiyo, senior economist at the lender, wrote in a client note. “Only T-bills issued for monetary policy purposes are being settled.

All that makes it imperative for authorities to unlock funds from multilateral lenders. However, accessing the IMF lifeline requested last year requires implementing critical reforms, which the government has failed to do, the Washington-based lender said last month.

The next coupon on the 2031 dollar bond, a $45 million payment, doesn’t fall due until September. But Samir Gadio, head of Africa strategy at Standard Chartered expects the dollar bond to be under pressure from debt and financing vulnerabilities as well as fuel and fertilizer import disruptions.

An “overvalued exchange rate and a still uncertain time-line for IMF program discussions” further weighs on the credit, Gadio added.

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elecar

 

‘Lost Cause’ Company Bond Doubles Amid Venezuela All-Out Rally

Power lines run through transmission towers in Maracaibo, Zulia state, Venezuela.

Photographer: Carlos Becerra/Bloomberg

By Nicolle Yapur and Zijia Song

March 25, 2026 at 2:14 PM GMT+1

Takeaways by Bloomberg AI

• A defaulted bond issued by Electricidad de Caracas has almost doubled in value this year as investors look for ways to profit from Venezuela’s new-found rapport with the US.
• The notes have leaped 98% to about 31 cents on the dollar since December, according to Trace data, and are drawing attention from investors hunting for ways to bet on a recovery in South America’s most distressed debt.
• Restructuring scenarios have improved since Maduro’s exit, with some analysts stating that the haircut applied on the bonds could be as low as 30%, and that Elecar bonds will likely be included in a future restructuring.

A defaulted bond issued by an old Venezuelan power company and long regarded as a lost-cause by investors has almost doubled in value this year as investors look for ways to profit from Venezuela’s new-found rapport with the US.

The notes, issued by Electricidad de Caracas, or Elecar, have leaped 98% to about 31 cents on the dollar since December, according to Trace data, triple the return on any other corporate debt in Latin America. That has handed outsize gains to investors like Grantham Mayo Van Otterloo & Co. LLC, which has owned around a quarter of the debt for many years.

The $650 million of bonds are drawing attention from investors hunting for ways to bet on a recovery in South America’s most distressed debt, after the capture of Nicolas Maduro paved the way for the US to reestablish diplomatic relations. With the nation’s sovereign debt up more than 40% this year — getting a fresh boost from surging oil prices amid the war in the Middle East — traders are looking to smaller, illiquid securities to continue profiting from an eventual restructuring.

“As the entire Venezuelan bond complex has gapped higher this year after the ousting of Maduro, investors begin to look for lower priced claims, even if they are less liquid,” said Carl Ross, a partner and sovereign credit analyst at GMO.

Nationalization

Elecar issued the bonds in 2008, shortly after late President Hugo Chavez nationalized the country’s power grid and bundled up several electricity firms — including Elecar — into a state-managed corporation. The notes expired in 2018, and have been in a years-long default along with the rest of the country’s debt.

They had traded as low as five cents on the dollar as the US ramped up sanctions against the Maduro administration. Now, as Washington eases sanctions on the energy industry and restores diplomatic ties with Venezuela’s acting administration under Delcy Rodriguez, bondholders see increasing odds of getting paid on their investments.

Sovereign bonds are trading close to 50 cents on the dollar, while some securities from the state-owned oil company Petroleos de Venezuela SA, PDVSA, have also risen to that level.

Restructuring scenarios have improved since Maduro’s exit. Morgan Stanley stated last week that the haircut applied on the bonds could be as low as 30%, given that the country’s oil output is likely to recover faster than previously expected.

And that haircut may even apply to Elecar.

“Elecar bonds are governed by New York-law and have no collective action clauses,” making them easier to renegotiate, said Ramiro Blazquez, a strategist at StoneX. “This means that they will likely be included in a future restructuring, as leaving them out could lead to holdouts and litigation prospects.”

There’s still no clarity about how and when any restructuring of Venezuelan debt will take place. US sanctions continue to prevent investors from engaging in negotiations with the nation’s acting government, which is barred from issuing new debt.

But as traders search for value in the Venezuela bond curve, JPMorgan Chase & Co. and Bank of America have been urging clients to buy notes with large piles of unpaid interest.

“Elecar bonds have likely suffered from low liquidity and were largely seen as a lost cause when prospects for resolving the default appeared remote,” said Alberto Rojas, a senior EM strategist at UBS. “Now, with renewed optimism for Venezuela’s future, Elecar is beginning to respond.”