Zambia Nears Debt Resolution with $3 Billion Bond Restructuring
Zambia announced on Monday a breakthrough agreement with private creditors, restructuring $3 billion of its international bonds, marking a significant milestone in its debt restructuring efforts.
President Hakainde Hichilema hailed the agreement as historic, signaling progress in negotiations with Eurobond holders.
Zambia’s debt restructuring, facilitated under the Common Framework, has faced significant delays, impacting investments, economic growth, and local financial markets.
Despite challenges, Zambia secured a $1.3 billion IMF loan in 2022, contingent on debt restructuring with other creditors. Following the announcement, Zambia’s sovereign bonds saw a rise in value.
The restructuring proposal mirrors a preliminary deal from last year but includes adjustments following rejection by official creditors. Bondholders will see a reduction in claims, with approximately $840 million forgone under the new agreement.
The terms ensure comparability of treatment among creditors, approved by both official creditors and bondholders. IMF endorsement and positive reactions from bondholders signal progress towards debt resolution.
The government pledges to prevent preferential treatment for certain creditors and includes clauses to reinstate losses in case of default during the IMF program.
While the Paris Club has yet to comment, the agreement marks a significant step forward for Zambia in its debt restructuring journey.
