Zambia to exit sovereign default as bondholders back $3bn debt revamp

Daba Finance/Zambia to exit sovereign default

BREAKING NEWSMay 28, 2024 at 3:38 PM UTC

TLDR

Zambia nears the end of 4-year sovereign debt default, with majority of US dollar bondholders approving restructuring plan.
Over 90% of holders of $3 billion in international bonds back the plan, signaling progress towards its implementation.
Zambia's 2020 bond default highlights challenges in resolving debt crises in low-income countries within the international framework.

Zambia is nearing the end of nearly four years of default on its sovereign debt, with the majority of US dollar bondholders voting to approve a restructuring plan.

As of last week, over 90% of holders of the $3 billion in outstanding international bonds had backed the plan ahead of the May 30 deadline, according to Zambia's finance ministry.

This support paves the way for the restructuring to be implemented next month. Zambia's 2020 bond default underscored issues with the international framework for resolving debt crises in low-income countries.

Key Takeaways

The restructuring is crucial for Zambia, Africa’s second-biggest copper producer, to stabilize its economy and regain financial stability. Zambia is reworking its debt under the G20's Common Framework, designed to streamline debt restructuring for low-income countries by coordinating major creditors like China and the Paris Club. Zambia's case, seen as a significant test for the framework, has faced prolonged delays. The proposed plan involves bondholders swapping three existing bonds maturing in 2022, 2024, and 2027 for two amortizing bonds, with one offering higher repayments contingent on an improved economic outlook. In 2022, the country secured a $1.3 billion loan from the IMF, contingent on restructuring its debt with other creditors.

Zambia

Debt Restructuring

Debt Crisis

Debt Revamp

IMF

Economy

Sovereign Default

Copper Producer