Zambia announces debt restructuring agreement with private bondholders

2023-10-26 11:31:35

Zambia’s Ministry of Finance said on Thursday it had reached an agreement in principle on debt restructuring terms with a private creditor group that holds its international bonds, an important milestone in its protracted public debt restructuring process.

The deal will see the three existing bonds restructured into two new redeemable bonds due in 2035 and 2053 respectively under a “base case” scenario. Both bonds would mature in 2035 if Zambia’s economy performed better. In both scenarios, the agreement would translate into a nominal value cut of 18%, the ministry said.

The proposed restructuring includes a $700 million repayment and $2.5 billion in cash flow relief over the period of the 38-month, $1.3 billion Zambia IMF program, which was approved in September 2022.

Zambia was the first African country to default in the COVID-19 era in late 2020, and its restructuring process has suffered numerous delays. International bondholders have also complained that they have been left out of the process, which began with protracted negotiations with bilateral creditors including China.

The deal “paves the way for similar restructuring agreements with our other private creditors,” Zambia’s Finance Minister Situmbeko Musokotwane said in a separate statement. “We expect the rapid implementation of this agreement in principle by the end of the year.”