A US market regulator is probing the sale of $850 million in Mozambique government bonds used to purchase military equipment, which involved three major banks, according to a person with knowledge of the matter.

The Securities and Exchange Commission is seeking information from investors on the 2013 bond issue which was arranged by Credit Suisse and the Russian bank VTB Group on behalf of a Mozambique state enterprise, the source told AFP on condition of anonymity.

France's multinational bank BNP Paribas also helped sell the debt, mainly to US investment funds, but did not arrange the loans, the source said.

The borrowing was intended for the purchase of fishing boats and coastal security, according to information given to subscribers, but also was used to buy military equipment, the source said.

The SEC has yet to request information from the three banks, according to a second source, but has written to bondholders asking them to share the information the banks provided at the time of the bond sale.

Representatives of the SEC and BNP declined to comment, while Credit Suisse did not immediately respond to a request for comment.

The probe opens a new chapter in a scandal of hidden debts which has rocked Mozambique, one of the world's poorest countries, for months.

In April, Mozambican press reports revealed the existence of $1.4 billion in undisclosed public debts incurred since 2013 by state enterprises in deals overseen by Credit Suisse and VTB.

The debt carried a state guarantee even though lawmakers had not approved it, contrary to the constitution, according to the Swiss think tank Kontrapunkt.

Mozambique authorities later admitted that the funds from the bond issue, deliberately hidden from parliament, were used to purchased defense equipment.

As a result of the revelation, the International Monetary Fund suspended lending to the country, which is currently facing a fiscal crisis. However, the fund is holding talks with the government to restart the financial aid.

The Swiss financial market regulator Finma opened an investigation earlier this year in Credit Suisse's role in the matter, according to Contrepoint.

In October, Mozambique acknowledged that the debt is now unsustainable and requires refinancing.

But investors, which include the American investment firms AllianceBernstein LP, Franklin Templeton Investments and Greylock Capital, have resisted, claiming they already have allowed the postponement of initial repayments.

Bondholders have formed a committee to represent their interests, saying they were not informed that their investment would support military sales.

The Fitch ratings agency in November said Mozambique had officially defaulted on its debts, and was $175 million in arrears.

The country's debt-to-GDP ratio is expected to reach 130 percent this year, from 86 percent in 2015, according to the finance ministry