U.S. officials are casting an eye on millions in «tuna bonds» issued for impoverished Mozambique. As one of the bond-runners, Credit Suisse is at the center of the case.
Ballooning government debt of $1.35 billion is at the heart of the scandal, which Mozambique had kept from public view until April. A bond worth $850 million granted by Russia's VTB Bank, French BNP Paribas, and Credit Suisse is now being scrutinized by U.S. officials, according to a report in «The Wall Street Journal» (behind paywall).
The bond proceeds were intended to finance tuna-fishing boats, but part of the funds were used to buy military equipment instead. Swiss and British investigators are already investigating the deals, as finews.com has reported previously.
Now, the Securities and Exchange Commission, or SEC, has asked bondholders for documents provided by the three banks in the run-up to the bonds' sale, the newspaper reported, citing an SEC letter.
Neither the SEC nor Credit Suisse commented on the bond deal.
U.S. Muscle
The U.S.' involvement in the scandal is bad news for the banks: American officials have been hugely successful in extracting punishment for financial misdeeds such as rate- and foreign exchange-rigging, corruption such as 1MDB and FIFA or mis-selling financial products such as mortgage-backed securities.
A group of bondholders have joined up in recent weeks to secure their interests; they include fund managers AllianceBernstein and Franklin Templeton as well as several hedge funds.
Mozambique, its back against the wall after the International Monetary Fund, the World Bank and several countries stopped aid because of concern over the debt, has agreed to an outside audit of the bond deals. An initial report from this auditor is expected in February.
The east African nation's debt of $9.64 billion translates to roughly 77 percent of gross domestic product. Mozambique is already behind on its debt payments, much to the dismay of its investors.
