S&P downgrades Mozambique

S&P said it lowered the long-term foreign-currency sovereign credit rating on the Republic of Mozambique to CCC from B-, along with its short-term foreign-currency sovereign rating of C from B.

The agency also said it affirmed the B- long-term and B short-term local-currency sovereign credit ratings.

The ratings also were placed on CreditWatch with negative implications.

The reason for the deviation follows the government's new debt information, S&P said.

The next scheduled rating publication on the sovereign rating will be Aug. 5, the agency added.

In recent weeks, the authorities of Mozambique have disclosed the existence of guarantees provided by the government on the external debt of several enterprises, S&P explained.

The guarantees in question total more than $1 billion, equating to about 10% of 2016 forecast GDP for Mozambique, the agency said.

The non-disclosure of these guarantees highlights Mozambique's institutional shortfalls and weak debt-management culture, S&P said.

The estimate of these guarantees is now included in the measure of Mozambique's general government debt, the agency said.

Coupled with high fiscal deficits and currency depreciation, S& said it now estimates net general government debt at about 90% of GDP in 2016.

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