By Matina Stevis | From The Wall Street Journal

U.K. regulators are making inquiries into Credit Suisse Group AG’s and Russian bank VTB Group’s handling of hundreds of millions of dollars of debtthe banks arranged for the purchase of boats and military equipment for state-backed companies in Mozambique, people familiar with the matter said.

Meanwhile, the southern African country has brought in a prominent debt-restructuring specialist to advise on whether it should keep making payments on some related loans, other people familiar with the matter said.

The moves are the latest reactions to deals in a corner of the world that left the country more burdened with debt and feuding with international donors.

The deals with three state-owned companies included $622 million in loans to buy military equipment, $535 million in loans to build a shipyard and $850 million in bondsto buy a tuna-fishing fleet.

Much of the money raised for the tuna fleet was subsequently diverted to the military, Mozambique has said in public budgetary documents. Those bonds nearly defaulted and had to be restructured this year.

The U.K. Financial Conduct Authority is looking into whether the banks violated regulations governing disclosures to investors around the bond restructuring, people familiar with the matter said. While Credit Suisse is a Swiss bank and VTB is Russian, both banks used their U.K. operations to handle these bonds.

Investors have said they weren’t told of the $1.15 billion in loans at the time of the bond restructuring. The FCA is gathering information to see whether the banks failed to make necessary disclosures, the people familiar with the matter said.

Representatives for Credit Suisse and the regulator declined to comment. A spokeswoman for VTB said the bank wasn’t aware of any investigations.

Read more at The Wall Street Journal