S&P Global Ratings on Jan. 18 lowered Mozambique's long- and short-term foreign-currency sovereign credit ratings to SD/D from CC/C after the country failed to make an interest payment on a $727 million bond.

Mozambique said Jan. 16 that it would fail to pay the $59.8 million coupon due Jan. 18. The bond was issued as part of a restructuring of a state-guaranteed loan to fishing company Ematum, proceeds of which were meant to finance fishing infrastructure but were also used for military infrastructure, Forbes noted Jan. 17.

The restructuring of the notes in 2016 led S&P to temporarily downgrade Mozambique's foreign-currency ratings to SD/D; it later revised them to B-/B after the completion of the transaction.

Mozambique's ratings are likely to be raised from SD after the completion of any restructuring, or when S&P expects no further resolution to occur, the agency said.

The country's long-term local-currency rating was affirmed at B-/B, and the outlook on the rating was revised to stable from negative. Those actions reflect the agency's belief that Mozambique continues to honor its metical-denominated debt and that such debt would not be included in any restructuring or exchange offer that the country may launch.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.