https://en.sputniknews.africa/20230713/zambia-bondholders-reportedly-begin-talks-on-3-billion-debt-restructuring-1060517045.html
Bondholders Reportedly Begin Talks on Restructuring $3 Billion of Zambia's Debt
Bondholders Reportedly Begin Talks on Restructuring $3 Billion of Zambia's Debt
Sputnik Africa
Zambia became the first African country since the beginning of the COVID-19 pandemic to announce a default on its $18.6 billion external debt in 2020. The... 13.07.2023, Sputnik Africa
2023-07-13T18:55+0200
2023-07-13T18:55+0200
2023-08-03T10:44+0200
sub-saharan africa
southern africa
zambia
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debt restructuring
debt relief
economy
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Zambia's foreign bondholders have signed non-disclosure agreements (NDAs) with the southern African country's government, marking the start of formal talks to restructure more than $3 billion in international bonds, Western media reported, citing unnamed sources.The Zambian government is reportedly expected to provide detailed information to its major international bondholders, who are members of the creditors' committee, as a basis for debt restructuring talks.Zambia, the second-largest copper producer in Africa, reached a deal in June to rework approximately $6.3 billion of debt with bilateral creditors such as China and the Paris Club. This agreement signals progress in other pending national debt restructurings, including Ghana and Sri Lanka, according to the media report.The sources state that an updated macroeconomic package from Zambia is necessary before proceeding with the talks. A two-week restriction period will be in place, with the possibility of extension upon mutual agreement.Bondholders signing NDAs is a significant development, as it had not occurred since Zambia's default in 2020. The bondholder group, advised by Newstate Partners and Weil, Gotshal & Manges, comprises 15 European and US institutions holding a total of 45% of the Zambian Eurobonds. The steering committee includes Amia Capital, Amundi, BlueBay Asset Management, Farallon Capital Management, Greylock Capital and T. Rowe Price.Discussions will reportedly focus on net present value (NPV) reductions and how to take into account potential improvements in Zambia's debt sustainability.Creditors are discussing the inclusion of government-linked debt instruments that offer higher payouts based on improved economic outcomes. According to the Western media, mechanisms such as higher coupons, shorter debt maturities, or a combination of both are being considered to revise payments without changing principal payments.The executive board of the International Monetary Fund is expected to meet this Thursday to complete the first review of Zambia's $1.3 billion Extended Fund Facility program. Once completed, the country will have access to about $188 million.
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southern africa, zambia, debt, debt restructuring, debt relief, economy
southern africa, zambia, debt, debt restructuring, debt relief, economy
Bondholders Reportedly Begin Talks on Restructuring $3 Billion of Zambia's Debt
18:55 13.07.2023 (Updated: 10:44 03.08.2023) Muhammad Nooh Osman
Writer/Editor
Zambia became the first African country since the beginning of the COVID-19 pandemic to announce a default on its $18.6 billion external debt in 2020. The country sought to restructure the debt under the G20 Common Framework for Debt Treatments, co-chaired by Paris and Beijing.
Zambia's foreign bondholders have signed non-disclosure agreements (NDAs) with the southern African country's government, marking the start of formal talks to
restructure more than $3 billion in international bonds, Western media reported, citing unnamed sources.
The Zambian government is reportedly expected to provide detailed information to its major international bondholders, who are members of the creditors' committee, as a basis for debt restructuring talks.
Zambia, the second-largest copper producer in Africa, reached a deal in June to rework approximately $6.3 billion of debt with bilateral creditors such as China and the Paris Club. This agreement signals progress in other pending national debt restructurings, including Ghana and Sri Lanka, according to the media report.
The sources state that an updated macroeconomic
package from Zambia is necessary before proceeding with the talks. A two-week restriction period will be in place, with the possibility of extension upon mutual agreement.
"We first need to see Zambia's updated macroeconomic package, which is in part why we have to get restricted," one of the sources was quoted as saying.
Bondholders signing NDAs is a significant development, as it had not occurred since Zambia's default in 2020.
The bondholder group, advised by Newstate Partners and Weil, Gotshal & Manges, comprises 15 European and US institutions
holding a total of 45% of the Zambian Eurobonds. The steering committee includes Amia Capital, Amundi, BlueBay Asset Management, Farallon Capital Management, Greylock Capital and T. Rowe Price.
Discussions will reportedly focus on net present value (NPV) reductions and how to take into account potential improvements in Zambia's debt sustainability.
The southern African country's private creditors estimate that debt payments will have to be reduced "by over 50% to match the debt relief agreed by governments."
Creditors are discussing the inclusion of government-linked debt instruments that offer higher payouts based on improved
economic outcomes. According to the Western media, mechanisms such as higher coupons, shorter debt maturities, or a combination of both are being considered to revise payments without changing principal payments.
The executive board of the International Monetary Fund is expected to meet this Thursday to complete the first review of Zambia's $1.3 billion Extended Fund Facility program. Once completed, the country will have access to about $188 million.
