Standard & Poor’s downgraded the credit rating of Mozambique to rock bottom on the ratings scale on Wednesday.
‘SD/D’ is getting close to the black cap, only in this case the accused has been a bad boy, but promises to be good in future.
Technically, SD means that a debtor has selectively decided to default on payment of a coupon but it will make payments on other debt issues on time. The D means that a debtor is a bit of a chancer, and has failed one or more payments.
This followed Mozambique’s revelation on Monday that it plain didn’t have the bucks to pay a major debt. It was short of the equivalent of almost R815 million for the first coupon of a bond loan of almost R10 billion – all committed to the controversial Mozambican tuna company Ematum.
To make matters worse, it had already been restructured following an agreement reached with creditors.
