Zambia’s Bondholders Enter Talks on $3 Billion Debt Restructuring Proposal
A consortium of international bondholders in Zambia has initiated discussions with the government after signing a non-disclosure agreement to deliberate on a $3 billion debt restructuring proposal, according to three informed sources on Tuesday.
Sources revealed that the government dispatched a formal proposal for debt restructuring to the steering committee of the creditor group last week, signaling the commencement of formal negotiations typically heralded by the signing of a non-disclosure agreement.
Zambia’s President Hakainde Hichilema had previously announced in late February that the remaining official creditors, China and India, had consented to restructuring agreements, fostering optimism that the protracted restructuring process would soon conclude.
The official creditors had raised objections to prior bondholder agreements, citing disparities in debt relief compared to their own arrangements. However, specific alternative proposals from the bondholders were not disclosed at that time.
Zambia currently grapples with three defaulted bonds maturing in 2022, 2024, and 2027.
The country’s default in late 2020 marked a significant event amid the COVID-19 pandemic, yet its restructuring efforts have encountered setbacks, with the rejection of bondholder deals last year representing the latest hurdle.
