MAPUTO, Sha'ban 17, 1437, May 24, 2016, SPA -- Mozambique was heading for default on Monday after the government failed to honour a sovereign guarantee behind a $535 million loan taken out by a state-run company to build shipyards that have not yet materialised, a finance ministry source said, according to Reuters. The firm, Mozambique Asset Management (MAM), was unable to make the $178 million repayment, and the government, which last month admitted to $1.35 billion of secret foreign borrowing, also failed to come up with the cash, the source said. Foreign creditors behind the loan, organised by Russia's VTB Bank, had rejected the war-scarred southern African nation's initial proposals to renegotiate payments but were still in talks to try to reach a deal, the source added. Earlier on Monday, ratings agency Fitch cut Mozambique's credit rating to 'CC' from 'CCC', indicating that "a default of some kind appears probable". --SPA 01:34 LOCAL TIME 22:34 GMT www.spa.gov.sa/w