By Karin Strohecker and Roch Bouka
LONDON/BRAZZAVILLE, Oct 6 (Reuters) - The Republic of Congo’s dollar-denominated bonds fell on Friday to their lowest in more than five weeks after the government said it would start talks with its creditors on refinancing its debt, stoking fears of a restructuring.
Congo’s economy, which is heavily dependent on revenues from oil exports, has been hit hard by the drop in global crude prices. The government is negotiating with the International Monetary Fund (IMF) to try to secure a financial assistance programme.
The country’s sole-dollar denominated bond - issued 10 years ago and maturing in 2029 - fell 3 cents to trade at 75.76 cents, according to Tradeweb data.
The falls came after Finance Minister Calixte Nganongo told reporters in Brazzaville on Thursday that authorities had told a recent IMF mission the government would proceed with structural reforms and pursue budgetary adjustments already under way.
“With its financial and legal advisers, Congo Republic is going to begin discussions with its primary lenders with the objective of streamlining or refinancing its debt,” Nganongo added.
In a statement on its website, the finance minister pledged to take “vigorous and responsible measures” in the face of financial difficulties.
Congo Republic’s debt burden came under scrutiny by a technical IMF assessment mission which concluded on Wednesday.
The fund found that Congo Republic’s public or publicly guaranteed debt stood at 5.329 trillion CFA francs ($9.7 billion) at the end of July, equating to around 110 percent of gross domestic product.
The fund added that its findings would “inform the next steps toward a possible IMF-supported programme”.
Stuart Culverhouse, head of research at Exotix Capital, said the carefully worded IMF statement indicated that progress on the ground was needed before programme talks could kick off.
“The fund statement may have provided reassurance to some but in our view it might have raised as many questions as it sought to answer,” Culverhouse wrote in a note to clients.
Congo Republic’s woes come in the wake of Mozambique defaulting last year after the discovery of previously hidden credits led the IMF and Western donors to halt support for it, triggering the collapse of its currency.
Congo Republic has repeatedly been late in paying semi-annual bond coupons on its debts to investors.
Brazzaville is also embroiled in a decade old debt battle with construction firm Commisimpex that has weighed on its economy. Commisimpex went to a French court in September in its fight with the government over what it says are more than $1 billion in unpaid bills. ($1 = 551.0000 CFA francs) (Reporting by Karin Strohecker in London and Roch Bouka in Brazzaville)