Moody's Downgrades Mozambique Foreign-Currency Ratings to Caa3

Mozambique's foreign-currency ratings have been downgraded by Moody's to Caa3, reflecting higher risks that the government will restructure private-sector debt. The downgrade is a result of financing and payment pressures that were previously concentrated in the domestic debt market now spreading to external debt.

The country has $328 million in external arrears, which accounts for 1.3% of GDP, despite paying its $900 million eurobond due in 2031. This indicates severely constrained access to foreign-currency resources and high debt refinancing needs that leave limited capacity to clear arrears.

The stable outlook reflects Moody's assessment that risks to Mozambique's credit profile are balanced at the Caa3 rating level. Improved external financing access, policy adjustments, or progress on large-scale LNG projects could reduce restructuring risk or limit losses, according to Moody's.