Zambia blames creditors after Africa’s first pandemic-era default

Lavern Vogel

Zambia’s finance minister mentioned lenders ended up at the very least partly to blame for the region defaulting on 1 of its eurobonds final week, when a group of bondholders mentioned the skipped payment risked placing a extra adversarial backdrop for financial debt negotiations. The southern African country became the […]

Zambia’s finance minister mentioned lenders ended up at the very least partly to blame for the region defaulting on 1 of its eurobonds final week, when a group of bondholders mentioned the skipped payment risked placing a extra adversarial backdrop for financial debt negotiations.

The southern African country became the continent’s initial pandemic-period sovereign default, soon after holders of the financial debt refused to grant it a 6-thirty day period curiosity payment freeze on Friday.

The bondholders demanded extra information on Zambia’s debts to Chinese loan providers, but would not signal the needed confidentiality agreements, Bwalya Ng’andu mentioned.

Zambia skipped a $42.5m (£32.3m) curiosity payment on $1bn value of eurobonds maturing in 2024. The default was unavoidable because the region, which experienced acquired some financial debt reduction from the China Enhancement Bank, experienced to address all lenders similarly and experienced by now designed up arrears on other loans, Mr Ng’andu mentioned.

The country’s $1bn in eurobonds, owing 2024, fell 1.8pc to forty four cents on the greenback in London. The non-payment has brought on cross-default provisions in all the superb greenback bonds.

The bondholders committee, whose 15 customers stand for in mixture extra than 40pc of Zambia’s $3bn in superb Eurobonds, mentioned on Monday that traders experienced been not able to consent to a financial debt standstill because they hardly ever acquired information they required for an informed decision.

That includes aspects on Zambia’s “policy trajectory” and fiscal framework, and transparency on how the govt intends to deal with other lenders.

There experienced been no immediate conversations amongst bondholders and the authorities to date, the committee mentioned.

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